Global Manufacturing Loses Momentum, Fueling Worries
Our view: no question, to risk stating the obvious, jobs and real estate remain a challenge for the U.S. economy. As we've pointed out previously, creative destruction and constant corporate streamlining are perpetual negative pressures. AND, the real estate sector? Let's revisit one of our posts from December, Interesting Stat: How Much Private Sector GDP is from Construction and Real Estate?:
- The data suggest that nearly 21% of metropolitan area private sector GDP is derived from construction and real estate (residential and commercial). If we add in public sector GDP -- which also happened to be approximately 21% of total GDP in 3Q09 based on government data (link here) -- and assume that the private sector GDP referenced in the table includes personal consumption, private investment, and net exports for each metro area, then the contribution from construction and real estate declines to around 16-17% of total GDP.
The good news? Lots of positive things are happening here and around the world across various sectors, including technology and elsewhere that should keep the economy chugging along. AND, the good news we tweeted last Thursday, also from the WSJ (but from its economics blog, not front and center in the WSJ or elsewhere):
- "Manufacturing activity continued to expand in much of the world in June, though the pace of expansion was again slower in most countries. Greece, Hungary and South Africa were the only countries registering a contraction."
Manufacturing Activity, by Country
Click on the top of any column to resort the chart. (See last month’s chart.)
|Country||June PMI||May PMI||Monthly Change||Expanding or Contracting|
Our point: most of the world is still expanding, something few media outlets seemed to prominently highlight. While deceleration can be seen as a negative, some sort of slow-down off of huge Y/Y growth comparisons driven by initial recovery and inventory restocking was inevitable. Based on positive global trade figures, our expectation is that the demand remains sufficient to pull through inventories and support further growth. Alas, the sky isn't falling.
Disclosure: long YHOO.
© 2010 Jeffrey Walkenhorst
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