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Air cargo reflects PMI growth – will it continue?

GENEVA: January 10, 2016. IATA says the volume of world air cargo increased 6.8 percent in November year-on-year, echoing data from WorldACD that reported a 6.9 percent increase in chargeable weight flown for the same period although yields were 5.3 percent lower.

IATA said the uptick in airfreight traffic coincided with an increase in the shipment of silicon materials used in high-value consumer electronics; an apparent turnaround in new export orders; and a possible modal shift to air cargo following the collapse of the Hanjin Shipping Company in August.

"Air cargo enjoyed a strong peak season in November. And there are encouraging signs that this growth will to continue into 2017, particularly with the shipment of high-value consumer electronics and their component parts,” observed IATA director general and CEO Alexandre de Juniac. “But, the trend in world trade is still stagnant,” he added.

Azores AirlinesThe airline association said the wider weakness in world trade conditions remains an ongoing concern. Citing data compiled by the Netherlands Bureau for Economic Policy Analysis, IATA said trade volumes have trended sideways for the past two years and actually fell in October for only the third month in almost seven years.

“Against this backdrop, the big uncertainty remains how strong the underlying trend for airfreight will be once the peak periods have ended,” said IATA economist David Oxley.

According to a December manufacturing and services survey by J.P. Morgan/IHS Markit Global, the global purchasing managers' index (PMI) rose slightly from 53.3 in November to 53.4 - a 13-month high supported by inflows of new business and rising employment levels.

However while growth over the final quarter averaged the fastest since Q3 2015, a poor start to the year meant that the rate of expansion for the 12 months overall was the weakest since 2012.

The December PMI reflected a rise in industrial output in the US, the eurozone, China, Japan, the U.K. and Russia, with growth in Q4 over Q3 accelerating in almost all cases - the exception being a “mild” slowdown in the U.S.

“PMI data signal a positive end to the year for the global economy. Output growth accelerated to a 13-month high, with solid trends seen at both manufacturers and service providers,” said David Hensley, director of Global Economic Coordination at J.P. Morgan. “Improving rates of expansion in new business and employment suggest that the [global] economy is taking positive momentum into the new year, which should ensure the growth recovery continues to take hold at the start of 2017.”

The latest PMI was compiled by IHS Markit based on survey results from 16,000 purchasing managers in over 30 countries that together account for an estimated 88 percent of global GDP.

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