the manufacturing outlook...09 jun-09 sep-09 dec-09 mar-10 jun-10 sep-10 dec-10 mar 11 jun 11 dec 11...
TRANSCRIPT
THE GLOBAL MANUFACTURING OUTLOOK
Presented by: Dan Meckstroth Vice President and Chief Economist [email protected]
-3
-2
-1
0
1
2
3
4
5
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
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09
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09
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-09
Mar
-10
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10
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10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Perc
ent
Fed Funds Rate Inflation-Adjusted Fed Funds Rate
Federal Funds Rate
Source(s): Federal Reserve
Traditional Monetary Policy—Lower Short Term Interest Rates Through The Interbank Lending Rate of Bank Reserves
Federal Reserve Bank Balance Sheet
Source(s): Federal Reserve
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan-
07
Apr
-07
Jul-0
7 O
ct-0
7 Ja
n-08
A
pr-0
8 Ju
l-08
Oct
-08
Jan-
09
Apr
-09
Jul-0
9 O
ct-0
9 Ja
n-10
A
pr-1
0 Ju
l-10
Oct
-10
Jan-
11
Apr
-11
Jul-1
1 O
ct-1
1 Ja
n-12
A
pr-1
2 Ju
l-12
Oct
-12
Jan-
13
Apr
-13
Jul-1
3
Bill
ions
of D
olla
rs
Traditional Security Holdings Long Term Treasury Purchases Fed Agency Debt Other
Unconventional Monetary Policy—Asset Purchases Called Quantitative Easing (QE)
• Signal Federal Reserve’s Future Policies to the Market o Fed funds rate will stay near zero (0% to 0.25%) as long as:
• The unemployment rate remains above 6-1/2 percent, • Inflation between one and two years ahead is projected to be no more
than 1/2 percentage point above the Committee's 2 percent longer-run goal, and
• longer-term inflation expectations continue to be well anchored o Fed will begin to taper QE3:
o When unemployment drops below 7% o And if economic conditions permit
o How it works • Promises to tolerate higher inflation before raising rates, which keep
long rates low • Higher inflation drives the inflation-adjusted short term rates more
negative • Negative inflation-adjusted short term interest rate are a “tax” on saving
Unconventional Monetary Policy—Forward Guidance
45
50
55
60
65
70
75
80 20
07 Q
1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
2010
Q2
2010
Q3
2010
Q4
2011
Q1
2011
Q2
2011
Q3
2011
Q4
2012
Q1
2012
Q2
2012
Q3
2012
Q4
2013
Q1
2013
Q2
Tril
lions
of D
olla
rs
Household Wealth Recovery
Source(s): Federal Reserve
Housing and Stock Price Rebound Builds Wealth
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2013 Q1 2013 Q2 2013 Q3 (F)
Per
cent
age
Poin
t Con
trib
utio
n
Consumption Nonresidential Investment Residential Investment Change in Private Inventories Net Exports Government
2.8%-1.7%=1.1% 2.7%-0.2%=2.5% 2.3%-0.4%=1.9%
U.S. Growth Is Primarily Consumer Driven
Contribution to GDP Growth
F=Forecast Source(s): U.S. Bureau of Economic Analysis and MAPI
Household Debt Service Ratio*
10
11
12
13
14
15
1998
Q1
1999
Q1
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Q1
Perc
ent
of D
ispo
sabl
e Pe
rson
al in
com
e
*Mortgage and consumer debt Source(s): Federal Reserve and MAPI
Household Debt Burden Is the Lowest Since the Early 1980s
-20
-15
-10
-5
0
5
10
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13 Pe
rcen
t Cha
nge
in a
3-M
onth
Mov
ing
Aver
age
(Yea
r/Yea
r)
Manufacturing Mining and Construction Services
Jobs Growth Is Moderate, Manufacturing Lags
Employees on Nonfarm Payrolls
Source(s): Bureau of Labor Statistics and MAPI
50
55
60
65
70
75
80
Jan-
80
Jan-
81
Jan-
82
Jan-
83
Jan-
84
Jan-
85
Jan-
86
Jan-
87
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Jan-
01
Jan-
02
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Per
cent
of P
opul
atio
n 16
Yea
rs a
nd O
lder
Total Men Women
Workers Are Disappearing
Labor Force Participation Rate
Source(s): U.S. Bureau of Labor Statistics
-3 -2 -1 0 1 2 3 4
O f f i c e a n d A d m i n i s t r a t i v e S u p p o r t
C o n s t r u c t i o n a n d E x t r a c t i o n
P r o d u c t i o n O c c u p a t i o n s
S a l e s a n d R e l a t e d O c c u p a t i o n s
T r a n s p o r t a t i o n a n d M a t e r i a l M o v i n g
I n s t a l l a t i o n , M a i n t e n a n c e , a n d R e p a i r
F a r m i n g , F i s h i n g , a n d F o r e s t r y
P r o f e s s i o n a l a n d R e l a t e d
Management, Business, and Financial Operations
S e r v i c e O c c u p a t i o n s
Millions of Workers, Change from 2007 to Present
Economy Is Losing Middle Skilled Jobs
Shifts in Job Changes by Occupation can Identify Structural Changes in the U.S. Economy
Source(s): Bureau of Labor Statistics and MAPI
Percent Change Percent Change
Industry 2013 (F)
2014 (F)
2015 (F) Industry
2013 (F)
2014 (F)
2015 (F)
Motor Vehicles & Parts 7 2 4 HVAC Equipment 4 6 8 Petroleum & Coal Products 1 0 1 Textile Product Mills -1 0 -1
Plastic Products 6 4 4 Paints, Soaps, Toiletries & Misc. 7 3 3
Logging 1 17 20 Food 2 3 2
Wood Products 9 17 19 Apparel 1 -2 -5 Furniture & Related Products 3 4 5
Pharmaceuticals & Medicines -2 3 4
Consumer-Related Manufacturing Production
Strong Housing Recovery , Pent-Up Demand For Motor Vehicles, Modest Growth in Consumer Nondurables
F=Forecast Source: MAPI, August 2013
60
65
70
75
80
85
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Perc
ent o
f Cap
acity
Capacity Utilization By Industry
Industry
Percent
Aug.2013
Dec. 2007
Peak to
Apr. Manufacturing 77 79 -2 Motor vehicle, pts. 76 71 5 Food 84 79 5 Communication eq. 78 75 3 Petroleum 83 85 -2 Machinery 81 83 -2 Fabricated metal 85 86 -1 Chemical 74 77 -3 Computer 74 76 -2 Paper 84 86 -2 Plastics, rubber 74 77 -3 Semiconductors 71 78 -7 Electrical eq. 81 90 -9 Primary metal 75 84 -9 Aerospace 72 90 -18
Manufacturing Capacity Utilization
Source(s): Federal Reserve Board and MAPI
Manufacturing Capacity Utilization Flattens Out at A High Level
45
50
55
60
65
70
75
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Bill
ions
of D
olla
rs
Orders Shipments
Rebound in Business Equipment Orders
Nondefense Capital Goods Orders Excluding Aircraft
Source(s): U.S. Census Bureau and MAPI
200
250
300
350
400
450
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Bill
ions
of 2
012
Dol
lars
at A
nnua
l Rat
e
Public Construction
Source(s): U.S. Census Bureau and MAPI
Private Nonresidential Construction Down A Little; Public Construction Down A Lot
Private Nonresidential Construction
200
250
300
350
400
450
Jan-
03
Jan-
04
Jan-
05
Jan-
06
Jan-
07
Jan-
08
Jan-
09
Jan-
10
Jan-
11
Jan-
12
Jan-
13
Bill
ions
of 2
012
Dol
lars
at A
nnua
l Rat
e
Percent Change Percent Change
Industry 2013 (F)
2014 (F)
2015 (F) Industry
2013 (F)
2014 (F)
2015 (F)
Electric Lighting Equipment -4 9 15
Metalworking Machinery 2 5 6
Electrical Equipment 1 3 5 Industrial Machinery 2 6 6 Architec. & Structural Metals 7 4 11 Heavy Duty Trucks 0 10 7 Construction Machinery -1 3 8
Medical Equipment & Supplies 6 4 5
Engines & Turbines 2 8 7 Forging & Stamping 4 4 6
Agricultural Equipment 11 2 1 Aerospace Products & Parts 0 9 14
Drilling Equipment 2 4 7 Ship & Boat Building 6 -1 -3
Investment-Related Manufacturing Production
Sluggish Exports and Slow Economic Growth Limit Business Equipment Investment ; Improved Outlook Expected
F=Forecast Source: MAPI, August 2013
-500
-400
-300
-200
-100
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Cum
ulat
ive
Bill
ions
of 2
010
Dol
lars
2012 2013
Trade Deficit in Goods More Negative
Exports and Imports of Non-Petroleum Goods, Inflation-Adjusted
Source(s): U.S. Census Bureau and MAPI
Percent Change Percent Change
Industry 2013 (F)
2014 (F)
2015 (F) Industry
2013 (F)
2014 (F)
2015 (F)
Paper 0 1 2 Resins & Synthetic 3 6 4 Iron & Steel -1 5 5 Organic Chemicals 2 4 3 Alumina & Aluminum 0 3 6 Inorganic Chemicals -1 3 3 Glass 0 5 6 Ag. Chemicals 0 2 2
Material Manufacturing Production
Intermediate Industries Respond to Slow Industrial Growth in 2013 and Faster Growth Ahead
F=Forecast Source: MAPI, August 2013
-25
-20
-15
-10
-5
0
5
10
15 20
08 Q
1 20
08 Q
2 20
08 Q
3 20
08 Q
4 20
09 Q
1 20
09 Q
2 20
09 Q
3 20
09 Q
4 20
10 Q
1 20
10 Q
2 20
10 Q
3 20
10 Q
4 20
11 Q
1 20
11 Q
2 20
11 Q
3 20
11 Q
4 20
12 Q
1 20
12 Q
2 20
12 Q
3 20
12 Q
4 20
13 Q
1 20
13 Q
2 20
13 Q
3 20
13 Q
4 20
14 Q
1 20
14 Q
2 20
14 Q
3 20
14 Q
4 20
15 Q
1 20
15 Q
2 20
15 Q
3 20
15 Q
4
Perc
ent C
hang
e at
Ann
ual R
ate
GDP Manufacturing Production
Factory Sector Growth Is Converging But Remains A Little Faster Than The Overall Economy
U.S. Manufacturing Production and Total GDP Growth
Source(s): U.S. Bureau of Economic Analysis and Federal Reserve Board
Manufacturing Industrial Production
75
80
85
90
95
100
105
Dec
-06
Mar
-07
Jun-
07
Sep-
07
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Inde
x 20
07=1
00
Total Manufacturing Non-High Tech Manufacturing
Source(s): Federal Reserve Board and MAPI
U.S. Manufacturing Is 76 Percent Recovered
Global Manufacturing PMI
*Purchasing Managers Index Source(s): Markit
Global Manufacturing Rebound Underway
30
35
40
45
50
55
60
Dec
-05
Jun-
06
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Gre
ater
Tha
n 50
Per
cent
Equ
als
Gro
wth
Country 2013
Jul. Aug. Sept. United States 53.7 53.1 52.8 Canada 52.0 52.1 54.2 Mexico 49.7 50.8 50.0 Brazil 48.5 49.4 49.9 UK 54.8 57.2 56.7 Euro Zone 50.3 51.4 51.1 Japan 50.7 52.2 52.5 China 47.7 50.1 50.2 India 50.1 48.5 49.6 Korea 47.2 47.5 49.7 Taiwan 48.6 50.0 52.0 Russia 51.8 49.4 49.4
PMI By Country
90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Inde
x 20
00=1
00
World High Income Countries Developing Countries
Industrial Production By Country
Percent Change
2012 2013 (F)
2014 (F)
World Industrial Production 2.3 2.4 4.3 Advanced Economies 0.7 0.5 2.8 Developing Economies 5.6 4.6 5.8
World Industrial Production Accelerating Out of A Slump
Industrial Production
F=Forecast Source(s): World Bank and Consensus Economics and MAPI
8 9
-5 -2
9 9
7 7
10 5
8 8
9 3
-8 -6
-6 -4 -4
-3 -2 -2 -2 -1
0 0
1 2
-10 -5 0 5 10 15
C o m m u n i c a t i o n e q u i p m e n t A p p a r e l , f u r M e d i c a l a n d o p t i c a l i n s t r u m e n t s M a c h i n e r y a n d e q u i p m e n t N o n m e t a l l i c m i n e r a l B a s i c m e t a l s T e x t i l e s P a p e r F a b r i c a t e d m e t a l M o t o r v e h i c l e s R u b b e r a n d p l a s t i c s F o o d a n d b e v e r a g e C h e m i c a l s O t h e r t r a n s p o r t e q u i p m e n t
Percent Change
Industrialized Countries Developing Countries
Estimated Growth Rates by Sector in the First Half of 2013
Source(s): United Nations Industrial Development Organization and MAPI
Transportation, Chemicals, Food Led World Manufacturing
80
90
100
110
120
130
140
150
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Inde
x 20
00=1
00
Eurozone UK Germany
Industrial Production by Country
Percent Change
2012 2013 (F)
2014 (F)
Germany -0.3 0.4 3.1
UK -2.5 -0.4 2.2
Euro Zone -2.3 -1.1 1.9
European Industrial Production Turnaround Expected
Industrial Production by Country
F=Forecast Source(s): Left – World Bank and CPB, Right – Consensus Forecasts and MAPI
ECB’s Outright Monetary Transactions Program Reduces the Risk of Greece, Spain, and Italy’s Sovereign Debt
Borrowing Rates on 10-year Government Bonds
Source(s): European Central Bank and MAPI
0
5
10
15
20
25
30
Dec
-06
Mar
-07
Jun-
07
Sep-
07
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Perc
ent
Spain Italy Greece Germany
150
200
250
300
350
400
450
500
550
600
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Inde
x 20
00=1
00
China India
Industrial Production by Country
Percent Change
2012 2013 (F)
2014 (F)
China 10.0 9.2 9.0
India 0.8 2.5 4.2
Asia ex. Japan 6.4 6.6 7.4
Asian Industrial Production Hinges on Strong Chinese Growth
Industrial Production by Country
F=Forecast Source(s): Left – World Bank, Right – Consensus Forecasts and MAPI
-10
-5
0
5
10
15
20
25
30
35
40
Dec
-06
Mar
-07
Jun-
07
Sep-
07
Dec
-07
Mar
-08
Jun-
08
Sep-
08
Dec
-08
Mar
-09
Jun-
09
Sep-
09
Dec
-09
Mar
-10
Jun-
10
Sep-
10
Dec
-10
Mar
-11
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Perc
ent C
hang
e (Y
ear/Y
ear)
Power Production Industrial value-added
China’s Power Production and Industrial Value-added
Source(s): China’s Bureau of Statistics, China Electricity Council and MAPI
Physical Indicators Confirm A Growth Rebound in China?
0
5
10
15
20
25
30
35
40
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Yea
r-to
-dat
e Pe
rcen
t Cha
nge
(Yea
r/Yea
r)
FAI, Manufacturing FAI, Overall
-20
-10
0
10
20
30
40
50
60
70
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Yea
r-to
-dat
e Pe
rcen
t Cha
nge
(Yea
r/Yea
r)
FAI, Real Estate FAI, Transportation
FAI, Real Estate and Transportation
Source(s): China NBS and MAPI
Step-up in Public Spending Is the Major Driver Behind Investment Stabilization
FAI, Overall and Manufacturing
80
90
100
110
120
130
140
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
Jun-
12
Dec
-12
Jun-
13
Dec
-13
Inde
x 20
00=1
00
Brazil Mexico
Industrial Production by Country
Percent Change
2012 2013 (F)
2014 (F)
Brazil -2.8 2.8 3.4
Mexico 2.9 1.5 3.5
Latin America 0.2 2.1 3.2
Brazil Rebounds While Mexico Falters in Latin American
Industrial Production by Country
F=Forecast Source(s): Left – World Bank, Right – Consensus Forecasts and MAPI