Better News from Global Manufacturing on B2B Buying

The latest data from the J.P. Morgan/Markit version of the Purchasing Managers’ Index shows that gains are still being made despite some of the challenges facing retailers. There is obviously enough demand somewhere to justify the expansion of the manufacturing sectors in Asia as well as Europe and the United States. Much of this demand is coming from business and industry as opposed to the demand from consumers.

For the fifth straight month, the index for the euro zone ceded the 50 mark separating expansion from contraction. It now stands at 51.6, and that is up from the previous flash estimate. The impetus for that growth came from a predictable source: Germany. The German reading was much higher than it was expected to be and is at the highest level seen in over two years. They were joined in this progress by the Netherlands and, to a lesser extent, Italy, whose 51.4 level market its highest point in over three years. France, however, was still a laggard in the euro zone. Even Spain and Greece had more to hang their hats on with improved export numbers.

The UK numbers are as good as they have been in many months, reaching a 58.4. This mostly stemmed from expansion in the Middle East and Africa. Of all the nations in Europe, the British have been the most aggressive in developing business in these new markets, and it is starting to pay off.

The Asian numbers also looked better than expected. China stayed about where it has been at 51.4 (official version) or 50.8 (according to Markit). The Chinese are not getting the boost from export business they are accustomed to, but there is evidence the domestic economy is making a bigger contribution these days. One of the most impressive changes took place in Japan, and there are many who assert that Abenomics is finally having the impact expected by the prime minister and his team. The PMI jumped to 55.1, the highest number registered in Japan in more than four years. The vast majority of that gain has come from expanded exports, which is likely the result of the yen’s changing value. The economic plan in Japan has resulted in a much lower currency value and that allows Japan to grab some of the market share lost to China over the years.

Does all this mean that happy days are here to stay? It probably does not, but there are some signals that these gains might continue under the right circumstances. Much of the growth this month seems anticipatory, as there has been a buildup of inventory and there has been more investment in capital equipment geared towards expansion and development of new markets. The sense is that 2014 will be better.

- Chris Kuehl, PhD, Armada Corporate Intelligence

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