We anxiously await numbers from U.S. retail as a measure of the mood of the U.S. consumer. Indications so far suggest healthy growth compared to last year on the extended weekend between Thanksgiving and Cyber Monday. It looks like a cautious mood among shoppers, with slow sales of clothing but strong car sales. In my own local area I saw a muted Black Friday, though there were two malls that filled their primary parking areas Friday morning. Partly making up for the Friday slowdown, I saw surprisingly strong traffic at retail on Saturday afternoon.
It is manufacturing that is showing distinct signs of a global slowdown. Much of the recent slowdown in manufacturing is taken up by Volkswagen, which saw U.S. sales fall 24.7 percent in November compared to a year ago. Volkswagen is expected to face a formal criminal investigation in Germany after its diesel cars were found to be optimizing emission performance during emissions tests, but polluting ten times as much during normal driving.
Brazil is trudging through a year-long contraction that has seen employment levels fall by close to 10 percent. Brazil is affected most by its own dysfunctional political system, but is also disproportionately hit by the downturn in Chinese manufacturing, causing reduced exports and lower prices for materials such as copper. The latest PMI for Brazil came in at 43.8, revisiting levels of 2009. The survey showed manufacturers reduced production because of a broad decline in orders.
U.S. manufacturing is also showing a decline, with the ISM index at 48.6. November is the first month in which surveys of U.S. manufacturing have showed a decline, and it is only a slight decline, but perhaps large enough to take away the even smaller increases that U.S. manufacturing showed between July and October. The positive note in this survey was an increase in hiring as factories anticipate increases in production within the next two months.