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May 12, 2014

Slip in Global Manufacturing PMI signals slower rate of improvement, ACC says

Scott Jenkins

The JPMorgan Global Manufacturing PMI (purchasing manager’s index) slipped 0.5 points to 51.9, signaling that the upturn in the global manufacturing sector continued to ease at the start of the second quarter, according to the latest Weekly Chemistry and Economic Report from the American Chemistry Council (ACC; Washington, D.C.; A reading above 50 for the index indicates expanding business activity, while a reading below 50 signals contraction.
“The growth rate of the global manufacturing sector eased to a six-month low at the start of the second quarter,” the ACC report said, adding, “The slower rate of improvement reflected weaker gains in production and new orders.” Production declines were observed in Japan, China, South Korea, India, Taiwan, Brazil and Russia, the ACC report said, while the U.K. and the U.S. saw higher output and new orders accelerating. “The underlying trend in output growth is edging higher,” the report said “and growth in headline global industrial production is expected to settle back at its first quarter pace toward mid-year.”
Other data discussed in the ACC report included information from the U.S. Census Bureau regarding a 0.4% decline to $10.9 billion in the wholesale trade of chemicals for March. Inventories rose 1.0% to $12.5 billion, boosting the inventory-to-sales ration from 1.13 in February to 1.15 in March, the ACC report said. Wholesale sale of chemicals was up 7.4% compared to last year at this time, while inventories were up 7.0%.
The ACC report also discussed information on imports and exports released by the Census Bureau. U.S. exports of chemicals grew by 13.0% in March, reaching $46.3 billion in the first quarter of 2014, ACC said, but at the same time, imports of chemicals grew 13.3%, reaching $16.5 billion in the first quarter. “As a result, U.S. business of chemistry posted a trade deficit of $308 million in the first quarter,” ACC said. However, for chemicals excluding pharmaceuticals, exports grew 16.2% while imports grew 19.2% in March.
“A large deficit in pharmaceuticals trade persists and looking at chemicals excluding pharmaceuticals, the industry posted a $8.8 billion trade surplus in the first quarter,” ACC said. “The chemical industry posted a surplus in all major segments except pharmaceuticals and agricultural chemicals in the first quarter of 2014.” The largest contributor to net exports is basic chemicals, where exports of petrochemical derivatives and other industrial chemicals [including plastic resins] far outweigh imports, ACC added.
The U.S. Census Bureau reported that the nation’s overall trade deficit narrowed by $1.5 billion to $40.4 billion in March. Exports of goods and services grew $3.9 billion to $193.9 billion and imports rose $2.5 billion to $234.3 billion.

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