This spot has not been updated for a while due in large part to my relative incapacity -- a result of some unplanned surgery that sapped my energy. I suggest readers might find it amusing to read My View, appearing in the November/December issue of ILS, for details. But I am now almost 100% and back at the keyboard. Again, see My View for more thoughts on this.
So how did the world fair while I was away? Let's see: the Eurozone is still a mess, although Greece is back in favor with a new finance minister in charge. However, Portugal and Spain are still stressing out -- no change there. China remains the big thorn in everyone's side, as manufacturing in that country has contracted for the 11th straight month and the economic expansion in August was the worst performance in three years. The government still seems to be focused on domestic opportunities, and there does not seem to be any support for assisting the capex market to produce sales of sophisticated imported equipment for the production of parts for export. The outlook in China, according to MAPI (Manufacturers Alliance for Productivity and Innovation), is for 2012 manufacturing sales to grow 7.8%, down from previous estimates of 8.6%. For machinery and equipment, sales revenue is anticipated to be down 3% in 2012 and 4% in 2013 from previous estimates.
All of this means that countries exporting equipment into China will have to gut out 2012 and hope the government has another change of policy to open the floodgates for imports in 2013.
Working back down the food chain, this is not pleasant news for European companies dependent on exports to China. In the US, manufacturing grew for the first time in four months according to the ISM (Institute for Supply Management). And this poses a conundrum: are US companies dependent on sales to China or not? It looks like a "not" at this time, as manufacturing is cruising along even though surveys suggest that these companies are anxious about the possibility of a fiscal cliff brought on by domestic tax increases and budget cuts.
Third quarter reports and guidance from our ILS survey companies will start to arrive in our offices in late November, just in time for compilation into our annual economic review of the laser market. As of this writing, I don't have a clue as to what the numbers will look like, but I have the feeling the China situation may finally be rearing its ugly head here, as in other industrialized nations. Whatever happens, it looks like a bumpy ride for the coming weeks.