• Manufacturers produced $2.385 trillion in value-added output in the fourth quarter, an all-time high, with the sector accounting for 11.4 percent of real GDP. Adjusting for inflation (in chained 2012 dollars), real value-added output in manufacturing also set a new record. Overall, manufacturing contributed 0.32 percentage points to real GDP growth in the quarter.

• Manufacturing production was unchanged in March, following declines in both January and February. As such, output in the sector in the first quarter of 2019 has been disappointing, with softer global growth taking a toll. In March, production increased in 10 of the 19 major manufacturing sectors.

• With softer-than-desired data recently, manufacturing production grew just 1.0 percent over the past 12 months, down from 2.6 percent year-over-year in December. At the same time, manufacturing capacity utilization has dropped from 77.3 percent in December, the best reading since March 2008, to 76.4 percent in the latest data, a 10-month low.

• Yet, there have also been signs of a rebound in the regional data. Manufacturing activity continued to expand modestly in the New York and Philadelphia Federal Reserve Bank surveys, improving from declines in prior months and with a favorable outlook for the next six months. In addition, raw material costs, which were a major challenge last year, have decelerated notably in both districts. 

• Initial unemployment insurance claims fell from 197,000 for the week ending on April 6 to 192,000 for the week ending on April 13. This was the lowest level since September 6, 1969 yet another sign that employment data remain at historic lows.

• The International Monetary Fund expects global growth to slow from 3.6 percent in 2018 to 3.3 percent in 2019, according to its latest World Economic Outlook. That estimate is down 0.2 percent from its January outlook. The IMF forecasts real GDP growth of 2.3 percent in the United States in 2019, down from 2.9 percent in 2018, and it predicts that advanced economies will ease from 2.2 percent in 2018 to 1.8 percent in 2019.

• Seven of the top 20 markets for U.S.-manufactured goods exports contracted in March, the same pace as in February. In March, China and Singapore expanded for the first time since late last year, but France and Mexico both returned to negative territory. Other markets that continued to contract included Germany, Hong Kong, Italy, Japan, South Korea and Taiwan.

• Interestingly, the United Kingdom had the strongest PMI reading among these markets, but this might be somewhat deceiving. The solid reading in March in the United Kingdom had more to do with stockpiling of inventories as manufacturers tried to get ahead of Brexit uncertainties.

• The Caixin China General Manufacturing PMI expanded for the first time since November, suggesting that business leaders felt somewhat more upbeat in March. Real GDP held steady at 6.4 percent growth year-over-year in the first quarter of 2019, and following notable decelerations starting at the tail end of last year, Chinese industrial production, fixed asset investment and retail sales all ramped up in March.

• The IHS Markit Eurozone Manufacturing PMI contracted for the second straight month, dropping to the lowest level since April 2013, and industrial production fell for the fourth time in the past six months. More encouragingly, retail sales grew for the second straight month in February, and the unemployment rate remained at 7.8 percent in February, the lowest since October 2008.

• The U.S. trade deficit pulled back further from the 10-year high of $59.90 billion in December to $51.13 billion in January and $49.38 billion in February, the lowest point since June 2018. More importantly, U.S.-manufactured goods exports rose 1.65 percent in the first two months of 2019 relative to the same time frame in 2018, extending the solid growth last year overall.

• Manufacturers continue to focus on key trade developments at home and overseas, including:
• Efforts to finalize a durable and enforceable trade deal between the United States and China and address tariffs that are undermining U.S. manufacturing activity;
• Continued work by the administration and manufacturers to promote passage of the United States Mexico Canada Agreement;
• Prospects for Senate action on the four nominees to the U.S. Export-Import Bank Board of Directors needed to restore a quorum following the recent Senate rules change, and for House movement on robust and long-term Ex-Im reauthorization legislation;
• Action to move forward a strong reform and modernization agenda for the World Trade Organization;
• Updates on border personnel movements and impacts on manufacturers;
• Foreign trade barriers identified as part of the U.S. Trade Representative’s annual report released at the end of March; and
• Updates on the United Kingdom’s efforts to negotiate an exit from the European Union.