Fisher Investments Editorial Staff
US Economy

No Kidding

By, 04/05/2010

Story Highlights:

  • US manufacturing data exceeded expectations, but wasn't alone in its notable rise—its boom was mirrored across the world in March.
  • A more pervasive upward trend in manufacturing, the likes of which was reported this week, is a sign of progression for the broader global recovery.
  • One country's gain isn't necessarily another's loss—recovery can happen simultaneously.

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It was no April Fool's joke. The new month (and new quarter) was greeted with good news Thursday as global manufacturing data for March poured in above expectations. And stocks responded in kind, heading into the long weekend (US markets are closed on Good Friday) with a strong showing.

In the US, the Institute for Supply Management's (ISM) factory index rose to its highest level since July 2004. But US manufacturing wasn't alone in its notable rise—its booming activity was mirrored across the world in March. Markit Economics index, measuring activity of 3,000 eurozone firms, rose at its fastest rate in 40 months—with growth spurred by the region's fastest increase in export orders in 10 years. Chinese manufacturing expanded for the 13th consecutive month—and even the UK, often denigrated for its relatively sluggish recovery thus far, saw its factory output index rise to its highest point in more than 15 years, catching stride with its ninth straight monthly increase. Still think we're pulling your leg? JP Morgan's global manufacturing index rose to a 70-month high in March—out of 23 developed and emerging market nations, Greece was the only country logging contraction in manufacturing activity.

We've seen positivity in US manufacturing for a good stretch now, to the extent the industry has been heralded as a leader of the economic recovery here at home. But a more pervasive upward trend, the likes of which was reported this week, is a sign of progression for the broader global recovery. The production increases boosting the factory activity can be tied to depleted inventories, rising demand on a global scale (translating into mounting sales), and increasing trade (exports). In the wake of the recession, all these areas still have significant room to rise off their depressed levels—meaning manufacturing can continue its ascent accordingly.

 

In light of this impressive global showing, it's important to remember one country's gain isn't necessarily another's loss. Today's data supports the fact foreign manufacturing growth isn't coming at the expense of production here at home—an improving global economy benefits all countries. And it's not just factories benefiting—the continued, significant rise in global demand means manufacturing (and other related industries) can continue to rise simultaneously. The building blocks for sustainable global economic growth seem to be falling into place—we wouldn't joke about something like that, even on April Fool's Day.

 

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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