Wednesday, January 4, 2012

December Manufacturing Activity - a Good Sign for Transportation and Logistics Providers

The global economy continues to show improvements despite Europe’s debt crisis. Although still very weak, pockets of growth in manufacturing activity were noted in the US, Asia and even Europe.

2011 ended positively for US manufacturers as ISM’s survey indicated a jump in manufacturing activity for the month of December. Overall new orders, including both imports and exports orders, indicated good increases.

• New orders increased 0.9 points from November with the top three industries - Printing and Related Support Activities; Textile Mills and Apparel, Leather and Applied Products reporting the strongest growth.
• Import orders jumped a whopping 5.0 points with Apparel, Leather and Applied Products; Food, Beverage and Tobacco Products and Printing and Related Support Activities reporting strong growth.
• Export orders increased 1.0 points with Apparel, Leather and Applied Products; Computer and Electronic Products; and Fabricated Metal Products leading the demand.

India’s manufacturing activity increased to 54.2, a 3.2 point increase from November. The strong increase was due to both strong domestic and foreign demand.

China’s manufacturing activity for December remains sluggish at best. The HSBC’s index indicates the country’s manufacturing is still below 50 which mean contraction. However, the China Federation of Logistics and Purchasing index shows activity is growing slightly. According to various sources, the difference between the two indices are China's official PMI, compiled by the China Federation of Logistics and Purchasing (CFLP) for the National Bureau of Statistics, gathers more data from the country's biggest manufacturers. The private-sector gauge, compiled by UK-based private-sector data specialist Markit in conjunction with HSBC, focuses on the small and medium-sized enterprises that provide around 75 percent of the jobs in China. Either case, it appears Chinese manufacturing remains weak.

In Europe, Switzerland reported December activity climbed to 50.7 from 44.8 in November and in the UK, the index rose to 49.6 thanks to increases in export orders.

The positive trends in manufacturing will result in slight increases in cargo movement over the next couple of months for transportation and logistics providers. In particular, the US and India markets should experience increases in both imports and exports.