August may be bucking a trend, according to figures released by Panjiva. The research team reports a 1% increase in the number of global manufacturers shipping to the US market in August vs. July. Prior August figures showed a 1% decline in 2008 and 2007 when those months were compared with corresponding July figures.
The percentage of significant manufacturers on Panjiva's Watch List declined from 29% in July to 28% in August 2009. The Panjiva Watch List is a list of suppliers that are at risk of going out of business, says the firm. These suppliers have suffered a year-over-year drop of 50% or more in terms of volume shipped to US customers. The number of significant buyers who have dealt with a Panjiva Watch List supplier also declined from 40% in July to 38% in August.
The month-to-month data also showed a 1% increase in the number of US companies receiving waterborne shipments from overseas.
According to the Panjiva report, “As we look ahead, it’s worth remembering that September is when global trade fell off a cliff last year.” The report highlights three possible trajectories for global trade through the remainder of 2009:
Cliff-diving—If we have a new shock to the financial system, look for global trade to go off a cliff for a second year in a row. Panjiva gives this a low probability.
Holiday surge—If retailers bet on strong consumer spending in the holiday season, look for global trade to surge in the months ahead. Anecdotal evidence suggests that corporate buyers are being cautious (better to be burned by having too little inventory than by having too much), so a holiday surge is unlikely.
Holding steady—Probably the best bet. Over the last several months, we’ve seen a slow but steady recovery of global trade activity, says Panjiva. No reason to think we won’t see more of the same.