Earlier this week, Panjiva released data showing that the number of global manufacturers serving the U.S. market increased for a third month in a row.  This three-in-a-row increase is the first we’ve seen since we began tracking this metric in July 2007 — certainly an encouraging sign.  However, in an absolute sense, we’re still seeing a low level of trade activity, and global trade remains vulnerable to additional shocks.  Here’s a sampling of the press coverage of Panjiva’s latest analysis:

The Wall Street Journal: “‘America led the global economy into a downturn; now, a sustained increase in the number of global companies serving the U.S. market suggests that America may be leading us out of the downturn,’ said Panjiva CEO Josh Green. ‘That said, anyone hoping for a quick recovery to pre-crisis levels of global trade is likely to be disappointed.’”

http://blogs.wsj.com/economics/2009/06/18/trade-picture-clouded-by-rise-in-oil/

“Panjiva in BusinessWeek — Global Trade Data” />

BusinessWeek: “‘Increasingly, it feels that the worst is behind us,’ says Josh Green, chief executive officer of the trade-tracking firm. Waxing cautious, however, he adds ‘Still, we have a long way to get back to the pre-crisis level of global trade.’”

http://www.businessweek.com/managing/economic_recovery/blog/archives/2009/06/global_trade_ri.html

About.com: “Panjiva’s research team also found that there was a decline in manufacturers on their watch list, which was the first time since September 2008.”

http://logistics.about.com/b/2009/06/17/shipments-to-the-us-rise-again-in-may.htm

Supply Chain Management Review: “We are seeing some encouraging signs, but there is still a low level of overall activity in an absolute sense.”

http://www.scmr.com/article/CA6665999.html

Logistics Management: “Companies continue to be cautious in their approach to placing orders, according to Green, and they are much more cognizant of the risks that are in their supply chains.”

http://www.logisticsmgmt.com/article/CA6665988.html?industryid=48470

World Trade Magazine: “Panjiva cautions that there will likely be further supplier bankruptcies.”

http://www.worldtrademag.com/CDA/Articles/Breaking_News/BNP_GUID_9-5-2006_A_10000000000000610030

Modern Materials Handling: “Said Green… ‘As macroeconomic circumstances change, people are going to be looking at a variety of potential risks.’”

http://www.mmh.com/article/CA6665991.html

Carpe Diem: “[M]ore offshore manufacturers are shipping goods into the consumer-driven U.S. market, global-trade tracker Panjiva reports.”

http://mjperry.blogspot.com/2009/06/shipping-index-rises-for-third-straight.html

The word from Panjiva’s research team: for the third straight month, there was an uptick (2%) in the number of global manufacturers shipping to the U.S. market.  Notably, this is the first time we’ve seen three monthly increases in a row since we began tracking this metric in July of 2007.

Some additional good news:

• The percentage of significant manufacturers on the Panjiva Watch List declined from 31% in April to 30% in May.  This also is a first — the first decline in the percentage of significant manufacturers appearing on the Watch List since we began tracking this metric in September of 08.
• Similarly, the percentage of significant buyers having done business with a Panjiva Watch List supplier in the preceding three months declined from 41% in April to 40% in May.

These numbers lend further credence to the possibility that global trade has already hit bottom and that we are witnessing the first steps of a recovery in global trade.  However, pessimists should take note of the following:

• In 2008, there was a Spring uptick in the number of manufacturers shipping to the U.S., suggesting that there’s a seasonal component to what we’re seeing.
• This most recent 2% uptick in the number of manufacturers shipping to the U.S. is modest, suggesting that recovery to pre-crisis levels of trade activity will likely take some time.
• While things are getting better in a relative sense, the absolute amount of risk in the system remains quite high.  I.e., we’re likely to continue to see supplier bankruptcies, and the system as a whole remains quite vulnerable to further shocks.

Methodological notes for the data junkies:

• Manufacturers that have suffered a 50% or greater decline in volume shipped to American customers in the most recent three month period, versus the same period a year ago, are on the Panjiva Watch List.
• “Significant manufacturers” are companies that have sent 10 or more shipments to American customers within the last year.  As of the end of May, there were 86,331 significant manufacturers.
• “Significant buyers” are companies that have received 10 or more shipments from overseas manufacturers within the last year.  As of the end of May, there were 72,031 significant buyers.