US Manufacturing Grows, China Falters

By NANCY PARDO | Published: DECEMBER 1, 2011

An Institute for Supply Management (ISM) report out today puts PMI at 52.7 percent, an increase of 1.9 percent from October. Anything over 50 percent indicates growth, and the figures show expansion in U.S. manufacturing for the 28th consecutive month.

Of 18 U.S. manufacturing industries, eight reported growth in November:

• Wood Products
• Textile Mills
• Petroleum & Coal Products
• Primary Metals
• Food, Beverage & Tobacco Products
• Computer & Electronic Products
• Apparel, Leather & Allied Products
• Paper Products

Other industries such as plastics and rubber products and transportation equipment contracted. Respondents blamed floods in Taiwan for a slowdown in the transportation equipment sector, stating that they were still “chasing some components made in Thailand.”

Other respondents were more optimistic, especially around the automotive sector, stating that “Japanese auto production had returned to 100 percent, and domestic manufacturing continues to increase.”

The report indicates that “general economic environment, government regulations and European financial conditions” were all top-of-mind for respondents, but overall they were “cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders.”

Today’s report suggests that the U.S. might maintain its growth in the coming months due in part to the enduring strength of the auto industry which has continued to see an increase in new orders.

In addition, Bloomberg speculates in an article published today, that growth in emerging markets like Brazil may also be helping sustain demand for U.S.-produced goods.

Meanwhile, in a separate index from the China Federation of Logistics and Purchasing, PMI slid to 49 percent in November, the lowest in three years.

China may have fallen victim to a slowing global economy – new domestic and export orders contracted in November, indicating a decreasing demand for Chinese-made goods in Europe and the U.S. and in China’s own domestic market.

The Chinese PMI report comes on the coat tails of a move by China’s central bank to loosen its reserve ratio in order to free up more money to inject back into its economy.