Ponder on this!

Manufacturing dynamics:

June:

a) Slowdown in China,

b) Slump in the Eurozone (effect of April 7 ECB rate raise?? see my post of April 7)

Good news for UK exports!

According to the CBI, the Confederation of British Industry (member of BUSINESSEUROPE), manufacturing production rose for the first time in two years, as overseas demand for UK made goods increased and stock reductions eased.

According to the CBI's latest quarterly Industrial Trends Survey (note: The January 2010 CBI Industrial Trends Survey was conducted between 10th December 2010 and 6th January 2010; 461 manufacturing firms replied) there was a stronger-than-expected rise in output in the three months to January.

But the CBI warned that the outlook for the sector remains uncertain, with domestic demand still weak, and some firms still struggling to access finance.

Of the 461 manufacturers surveyed, 31% said output rose during the three-month period, while 20% said it fell. The resulting balance of +11% is the strongest figure since January 2007 (+19%).

Export orders rose for the first time since January 2008, boosted by the relative weakness of Sterling and improving global demand. 30% of firms said exports grew during the quarter, while 24% reported a fall, giving a balance of +6%. Exports are expected to grow more strongly in the next quarter (+13%), and firms are the most optimistic about export prospects for the coming year (+19%), since July 1995 (+21%).

Firms are continuing to de-stock, but at a slower rate, which also helped lift output. A balance of -11% indicated that stocks of finished goods fell in the quarter, compared to a balance of -29% in the October survey.

Domestic demand, however, was weaker than expected with 18% of manufacturers reporting a rise, and 26% a fall, giving a rounded balance of -9%. That compared with a balance of -16% in October. Total new orders were broadly unchanged (+1%).

Ian McCafferty, the CBI’s Chief Economic Adviser, said:

“After nearly two full years of falling output, manufacturers are seeing a return to modest growth, thanks in part to improved overseas demand and much slower stock reductions.

“It is encouraging that the weaker pound is now providing firms with some respite as global demand improves. Exports are rising for the first time in two years, as UK-made goods are looking more attractive in overseas markets. Manufacturers are also feeling upbeat about export prospects for the year ahead.

“However, the manufacturing sector is not out of the woods. With domestic demand still weak, and credit remaining constrained for some companies, firms expect growth to be more modest in the next quarter. This underlines our view that the UK’s economic recovery will be slow and protracted.”

According to the same survey, the availability of finance remains a concern, and is cited by 13% of firms as a factor likely to limit output, and by 12% as likely to limit export orders.

Despite that, sentiment about the overall business situation is continuing to improve, with a net 12% more optimistic than three months ago.

The rate of job losses across the sector is slowing. A balance of -13% indicated a drop in staff numbers during the quarter, an improvement on October’s balance of -34%.

Investment intentions for the year ahead are stabilising. Firms are planning on spending more on training and retraining (+11%) and on innovation (+15%). Investment in buildings will be cut back further (-18%) and little change is expected in spending on plant and machinery (+1%).

Domestic prices are expected to rise for the first time in six quarters (a balance of +8%). 66% of firms report that they are working below capacity, compared to 76% in October.

The recovery is a complicated "thing"

Case in point:

Driven by a 3.5% in foreign orders and a 0.5% in domestic ones, orders to German factories in October took an unexpected fall of 2.1% compared to September.

local or global, production vs transportation

Produce local, transport global
or
Produce global transport local (or regional)?

Which is better for the environment?
Which is more rational, in general?

Revised UK GDP and other data for Q2 2009

Q2 2009 Gross UK domestic product (GDP) fell by 0.6% compared with the previous quarter, instead of the previous ONS estimate of a -0.7% and an original estimate of -0.8%.
.
The Office for National Statistics stats show a manufacturing fell of 0.1% in Q2, instead of a previous estimate of -0.2%.

The new estimate of decline in construction in Q2 is 0.8%, quite lower than the previous ONS estimate of 2.2%!

The outsourcing effect: What is a "good" and what is a "service", actually?

Is outsourcing part of the reasons that the French said no to the EU Treaty in Many 2005 (or fear of the "Polish plumber"?)

What are the externalities of the outsourcing of call centers from the UK to English speaking Asia? Of East EUropean house painters flying in to do a job in the UK or Belgium and then flying back home?

Is the outsourcing of IT services and other services from the US to Asia a source of the instability of the recovery of the US economy?

We do live in a world where services are covering a much larger piece of the total GNP/GDP pie.

Where free trade of goods and movement of capital are at historical levels (if you factor out the current crisis)

So:

Is there a difference between trade in goods and in services?

What are "trade-able" or exportable or "outsource-able" services"?

Is the world prepared to deal with outsourcing of work rather than import of goods?

Why do some EUropeans (and others) seem more afraid of outsourcing of services than of imports of goods?

Is there an implied assumption that whereas it is "OK" for non-OECD countries to export goods to OECD ones, it is "not OK" to "export" services? If yes, why?

What is a "good" and what is a "service", in today's reality?

What is, in essence, the difference?

Written: June 1, 2005
Updated: Sept. 29, 2009

Rationalising prodiction and transportation

How do we rationalise production and transportation for better environment and better life? Is emissions trading the best way to such a goal?

manufacture regonally, consume regionally?

Which has a lower carbon footprint per unit: global manufacturing or global distribution?

In recent decades, the idea was to rationalise/consolidate manufacturing in fewer plants (and thus decrease unit cost of production) and then distribute more globally.

In the last few years, with Global Warming and green taxation on transportation, are we not in effect "re-configuring" the previous logic?

And what is the new logic? Eg. Produce regionally, distribute and consume regionally?

Orders for durable US goods down in June

US orders for durable manufactured goods fell in June by 2.5%, the largest amount in the last five months.

Lower demand for air travel led to commercial aircraft orders down 38.5%, while orders for motor vehicles and parts fell by 1%.

Note: If one excludes transportation related goods, orders for durable goods were up by 1.1% in June.

UK jobs and manufacturing in March

In March: UK manufacturing output continued to fall, but the fall was not as severe as had been expected (and that is supposed to create optimism??). In Q1/09, UK unemployment went up by 244,000 to 2.22 million to 7.1% of the workforce.