This week, the United States will release the latest manufacturing data, some areas show a rebound, but in high inflation to suppress demand, the banking crisis hit the credit market, the industry believes that the full recovery of the United States manufacturing industry will take time.

　　Local rebound can not hide the recovery dilemma

　　New York Federal Reserve data released on the 17th, New York State manufacturing activity in April after four months of contraction, some expansion, indicating that the region's continued weak manufacturing conditions may be bottoming out.

　　The New York Fed's manufacturing index rose to 10.8 in April from -24.6 in March, the highest since July last year and more than the -15 that economists had generally expected. about 35 percent of firms surveyed said economic conditions improved in April compared with the previous month, although 24 percent still thought economic activity had deteriorated. The New York Fed said that a recovery in demand drove the significant improvement in the index, with new orders and shipments expected to increase moderately in the near term and employment expected to grow.

　　However, from a broader perspective, the overall manufacturing recovery process in the United States is still weak.

　　The latest ISM report released this month showed that in March, the US manufacturing purchasing managers' index (PMI) stood at 46.3, down 1.4 from the previous month, below 50 for the fifth consecutive month and setting a new low since June 2020. Changes in the sub-indices showed that weaker demand and falling employment were the main reasons for the continued weakness in the US manufacturing sector. The new orders index fell 2.7 from the previous month to 44.3, the sixth consecutive month below 50, while the index of employees fell 2.2 from the previous month to 46.9, the third consecutive month-on-month decline and the second consecutive month below 50.

　　Data released by the Federal Reserve on Friday also confirmed the weakness in the manufacturing sector, with US manufacturing output at -0.5% YoY in March, well below market expectations of -0.1%, the first decline in the indicator so far this year. Mining output also fell by 0.5% from a year earlier. Reuters quoted most economists as saying that manufacturing remained in recessionary territory.

　　"This is a cautionary sign that the trend of shrinking manufacturing is continuing and bodes ill for the economy." Ryan Sweet, chief economist at the Oxford Economics Institute, said.

　　Manufacturing recovery will take time

　　Weakness in the U.S. manufacturing sector has persisted for several years, and industry insiders say the high inflation situation will continue to depress demand, coupled with the recent banking crisis hitting the credit markets, it will take time for the real economy to see a real recovery.

　　In the long run, the United States manufacturing value added accounted for the proportion of global manufacturing value added continues to decline. 1990, the United States manufacturing value added accounted for 22% of global manufacturing value added, down to 17% in 2021.

　　Manufacturing value added as a share of GDP also continues to decline in the US, from around 28% of GDP in the early 1950s to 11% in 2021.

　　In addition, the number and share of manufacturing employment has been declining. Manufacturing employment in the US has been growing since 1939, peaking in 1978 (19.33 million). 12.98 million people are employed in the US in 2022. While this is up from the historic low in 2020, it is still at a low level. And, in 2022, manufacturing employment in the US will account for only 8% of all employment, the lowest level in history.

　　Industry insiders say that as the US commodity consumption recovery enters its end, the demand compression effect is continuing to fester in more areas as the Federal Reserve continues to raise interest rates sharply.

　　Some recent crises in the U.S. and European banking sectors have increased the uncertainty of the U.S. economic recovery, and institutions continue to heat up expectations of a U.S. recession, with manufacturing also set to be dragged down.

　　Standard Chartered predicts that in the next 12 months, the U.S. economy into a recession probability of 80%. Goldman Sachs has raised the probability of a US recession to 35% from the 25% predicted earlier. Based on the high inflationary pressure, the current Federal Reserve has no willingness to change the pace of interest rate hikes, which continued in the first half of the year, and the negative impact on US consumption and investment continues to emerge. The manufacturing sector is hardly alone, and it remains to be seen whether the partial rebound is sustainable.

　　Radical policies disrupt the global recovery process

　　It is worth paying attention to the fact that, in the process of reshaping global supply chains, the United States, while promoting the return of manufacturing industries by means of tax preferences, policy attraction and legislative compulsion, is trying to suppress the competitiveness of its rivals through trade bullying, tariff barriers, industrial subsidies and other abnormal and non-market approaches, basing the continued prosperity of its manufacturing industries on the detriment of the interests of other countries, which poses a serious challenge to the integrity of economic globalization and the stability of the world This poses a serious challenge to the integrity of economic globalisation and the stability of the world industrial chain.

　　In August 2022, the US passed two bills to promote the return of manufacturing, the Inflation Reduction Act and the Chip and Science Act.

　　The former includes $369 billion in subsidies for new energy technologies, which take effect in 2023. The latter includes $39 billion in funding to stimulate semiconductor manufacturing and $24 billion worth of manufacturing tax credits.

　　These US policies have raised the hackles of European and Asian allies, who say such high subsidies and Made in America requirements amount to trade protectionism. A number of European leaders have publicly warned that a series of unilateralist acts such as the US Inflation Reduction Act could trigger a race to the bottom.

　　As a degree of countermeasure, the European Commission released the Critical Raw Materials Act last month, which will significantly increase Europe's capacity to refine, process and recycle critical raw materials.

　　Industry insiders have recently said that US policies in the manufacturing sector will increase the cost of attracting and retaining investment in related industries in other countries, and will particularly increase the burden on tighter fiscal countries such as Europe, bringing new challenges to policy makers who are already tired of dealing with high inflation.