As financial markets digest the economic and political ramifications of a Donald Trump victory in the U.S. presidential election, there likely will be lingering uncertainties that could increase market volatility, at least in the short term, according to the National Association of Manufacturers.
At the same time, there were some signs of progress to report in recent data, even as manufacturers continue to grapple with global headwinds. For instance, the J.P. Morgan Global Manufacturing PMI increased from 51 in September to 52 in October, its highest level since October 2014, with strong accelerations in both new orders and output.
In addition, 11 of the top 15 markets for U.S.-manufactured goods had growing manufacturing sectors in October, up from seven in August and nine in September. As such, trends are moving in the right direction, said Chad Moutray, chief economist for the NAM, in a special report issued Thursday.
The strongest manufacturing growth among top U.S. trading partners was in the Netherlands, Germany and the United Kingdom. By contrast, Brazil, Hong Kong and South Korea remained mired in negative territory.
Although there have been improvements in international trends, manufacturers have continued to struggle to increase demand overseas.
Beyond soft economic growth in key markets, one of the other larger factors suppressing global sales has been the U.S. dollar, which has appreciated nearly 21 percent since mid-2014 against major currencies.
Indeed, U.S.-manufactured goods exports have fallen 5.2 percent through the third quarter this year, relative to the same period in 2015, according to new seasonally adjusted data from TradeStats Express.
Moreover, year-to-date exports were lower in eight of the top 10 markets. On the positive side, the U.S. trade deficit fell to its lowest level since February 2015. The reduced headline number stemmed from increased goods exports, fewer goods imports and a higher service-sector trade surplus, with the latter at its highest point so far this year.
There has been continued strength in the United Kingdom’s manufacturing sector despite ongoing uncertainties about the country’s planned departure from the European Union.