Fog in the English Channel: the UK suddenly isolated from the rest of Europe! Wishful thinking for some, perhaps, but policy makers in the Eurozone and around the world currently appear fog-bound as confusion reigns.
Last month the US PMI registered 51.65%, an increase of one percentage point from August, indicating expansion in the manufacturing sector for the 26th consecutive month and at a slightly higher rate. On the other hand, JP Morgan’s global PMI study registered 49.9% in September, down from 50.2% in the previous month, while the JPMorgan With Global Manufacturing PMI™ posted below the neutral 50.0% mark for the first time since June 2009.
Clear? Not really. In Europe the financial uncertainty is tainting a range of different markets. In the UK, the government is bolstering the money supply while the rest of the Eurozone’s legislators appear lost in a fog of indecision - a condition that also applies, to a lesser degree, to the US. China’s robust growth seems to be easing, with mid-sized businesses seeing longer payment periods and greater uncertainty.
I viewed this latest financial crisis while on a trip to Houston, Texas, where the local economy seemed remarkably robust compared with many of the countries I have visited this year! However, this is not the view Ben Bernanke of the Federal Reserve Bank is portraying, as much of the rest of the US is clearly suffering.
One positive aspect is the report of “re-shoring”, the practice of repatriating jobs from China to the US. Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of three million jobs in the US by 2020, according to Boston Consulting Group.
This message is clear: while China has overtaken the US as the world’s largest manufacturer and a serious threat to the major automakers, don’t write off the US just yet.
The Bullwhip effect I discussed earlier in the year seems to be at a point of inflexion. We can also expect a classic four-yearly stimulus ahead of the 2012 US election. So overall, the risk of recession looks over-cooked – but it won’t be a booming recovery. Add to this the falling oil price which is a reversal of the ‘Middle East Tax’ which sucked demand out of the Western economies earlier in the year.
In lubricants marketing the challenge of slow/slower economic growth, though probably not recession, is making marketing and pricing more tricky. According to the latest RPS Energy white paper, inability to recognise real from perceived growth will make margins tougher in future, having been “well bolstered” already, so lubes sales and marketing teams need to anticipate some pressure.
On the technology front, the continued rapid evolution of new media, mobile applications and mobile website access means, as always, that those organizations who enter this arena quickly and efficiently will steal a march on their slower competitors. In tough markets it is all about riding the right waves and staying ahead. Naturally, OATS is ready to provide new applications backed by strong, re-inforced data content.
If you’d like to find out more about OATS’s latest database developments or offer comments and contributions to the OATS Bulletin, we’d be delighted to hear from you. Simply contact us at bulletin@oats.co.uk
Sebastian Crawshaw
Chairman