REGIONAL REPORT and the possible recurrence of shutdowns in China . According to the IMF , the pandemic and associated lockdowns shifted consumption to goods from services as people reduced travel and entertainment . This also widened global balances as advanced economies with deficits increased goods imports from emerging market economies with surpluses .
“ In 2021 , we estimate that this shift increased the United States ’ deficit by 0.4 per cent of gross domestic product and contributed to an increase of 0.3 per cent of GDP in China ’ s surplus ,” said the IMF .
The manufacturing outlook
Commodity prices are one of the biggest drivers of external positions , and last year ’ s rally in oil prices from pandemic lows affected exporters and importers asymmetrically . Russia ’ s February invasion of Ukraine exacerbated the surge in energy , food and other commodity prices , widening global current account balances by raising surpluses for commodity exporters .
“ The past two years have demonstrated the need to increase the resilience of U . S . supply chains . This would mean incorporating a greater diversification of input sourcing across countries ; improving infrastructure , logistics and information systems ; and reducing trade costs . It will be important that the pursuit of supply chain resilience is not used as a motivation to favour domestic over foreign producers or to create incentives that fragment the global trading system ,” added the IMF .
The National Association of Manufacturers Q2 2022 Manufacturers ’ Outlook Survey highlighted manufacturers ’ significant concerns around recession , inflation , hiring and China competition legislation . The NAM conducted the survey from 17 – 31 May 2022 . Its key findings were :
■ In the survey , 59.3 % of manufacturing leaders believed inflationary pressures would make a recession more likely in the next 12 months .
■ Increased raw material costs topped the list of primary business challenges in the second quarter , cited by 90.1 % of respondents .
■ Three-quarters of manufacturers felt inflationary pressures were worse today than six months ago , with 53.7 % noting that higher prices were making it harder to compete and remain profitable .
■ The top sources of inflation were increased raw material prices ( 97.2 %), freight and transportation costs ( 83.9 %), wages and salaries ( 79.5 %) and energy costs ( 55.9 %), with 49.4 % also citing a shortage of available workers .
■ When asked about what aspects of the China competition legislation were most important for supporting manufacturing activity , 70.9 % of respondents cited addressing port congestion and competition issues in ocean shipping .
■ Despite ongoing economic headwinds , manufacturers remain largely optimistic , with 82.6 % of respondents maintaining a positive outlook for their company .
Amid historic supply chain challenges and inflationary pressures , along with increasing energy costs , the National Association of Manufacturers has launched a six-figure ad campaign calling on Congress to protect manufacturing jobs by opposing new taxes on the industry .
Metalforming in focus
Image : Shutterstock . com .
Metalforming companies forecasted little change in business conditions for three months after July 2022 but continue to report a drop in daily shipping levels , according to the July 2022 Precision Metalforming Association ( PMA ) Business Conditions Report . Prepared monthly , the report provides an economic indicator for the next three months of manufacturing , sampling 109 metalforming companies in the United States and Canada .
PMA ’ s July report showed that 48 % of metalforming companies anticipate no change in general economic activity in those three months ( compared to 50 % in June ), 15 % forecast an increase in activity ( the same percentage reported in June ) and 37 % predict a decrease in activity ( compared to 35 % in June ).
The report also showed little change in expectations for incoming orders , with 20 % of survey respondents forecasting an increase in incoming orders over the three months ( compared to 19 % in June ), 48 % predicting no change ( compared to 51 ) and 32 % anticipating a decrease in orders ( compared to 30 %).
However , current average daily shipping levels dropped for the third consecutive month , with 28 % of respondents reporting a decrease ( increasing from 23 % in June ), 44 % reporting no change ( compared to 41 % in June ) and 28 % reporting an increase ( decreasing from 36 % in June ).
Lead times improved with only 23 % of metalforming companies reporting an increase in lead times in July , compared to 36 % in June . Four per cent of companies had a portion of their workforce on short time or layoff in July , up from 2 % in June , while 70 % of companies are currently expanding their workforce ( compared to 76 % in June ).
U . S . light vehicle production
Chicago , USA ( Pedro Lastra , Unsplash ).
The conflict in Ukraine has exposed the fragility of the world ’ s economy and its automotive supply chains . The damaging war and severe sanctions against Russia are already having a serious effect on energy prices , raw materials and agricultural goods . On top comes the disruption of the automotive supply chain due to logistical challenges and production stops related to operations on the West Ukrainian border .