Export rebound signals strengthening manufacturing scenario

Foreign trade, or exports minus imports, in a GDP sense can be a drag on growth when it is really a plus for the health of manufacturing

By ·

Logistics managers in the manufacturing sector should welcome a bout of "fairly solid" growth after two lackluster and lethargic years (2015–16), observe economists for IHS Markit.

While noting that the ISM purchasing managers' index (PMI) for June bounced back to 57.8, economist Michael Montgomery says foreign trade is now more likely to be a boost or a marginal drag than the major drag that it had been in the recent past.

“The report's indication that new export orders rebounded to a 59.5 reading in June underscores what is true today that was missing in action for the prior two calendar years,” he says.

Foreign trade, or exports minus imports, in a GDP sense can be a drag on growth when it is really a plus for the health of manufacturing, since many of the raw materials and supplies (like oil, copper, and rubber) are imported, adds Montgomery

“Items like steel are more problematic since the imports compete with domestic producers,” he says. “But even there, the worst aspects of a stronger dollar have already done their greatest damage and are not primed to worsen, with manufacturing turning healthier on a global basis.”

The balance of 2017 is not set to be a "barn burner," but solid growth is in the cards, Montgomery concludes.  The sole significant drag for the remainder of this year is bringing auto inventories on dealer lots back down into line with sales.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Article Topics

· All Topics
Latest Whitepaper
Totes keep produce fresh from field to store
A two-part reusable plastic tote features a frame that cradles produce in a recyclable, replaceable sleeve.
Download Today!
From the December 2017 Modern Materials Handling Issue
Confronting an aging materials handling system and new channels of business with new customer expectations, Rocky Brands installed a put-to-light and sortation system to ramp up fulfillment.
The Big Picture: Navigation Gets a Reboot for Automatic Vehicles
Top 20 3PL Warehouses 2017: Growth amid change
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
The State of the DC Voice Market
A lot has changed in the last 10 years, especially in voice technology. This webinar will cover the state of the voice market, review two leading voice solutions and help you gain a better understanding of the options and capabilities available today.
Register Today!
EDITORS' PICKS
System Report: Rocky Brands Sees the Light
Confronting an aging materials handling system and new channels of business with new customer...
Top 20 industrial lift truck suppliers, 2017
The top lift truck suppliers list is changing with industry acquisitions causing a dramatic...

Lodge Manufacturing: Distribution Cast in Iron
In a new facility, iPhones and a new WMS allowed cookware manufacturer Lodge to double its business...
Rochester Drug Cooperative: Robots ready for work
It’s still early stages, but Rochester Drug Cooperative is proving that mobile robotic piece...