Investing Curiouscatblog

Tag: economic data

  • Top 10 Countries for Manufacturing Production in 2010: China, USA, Japan, Germany…

    chart of output by top 10 manufacturing countries from 1980 to 2010

    Chart of output by top 10 manufacturing countries from 1980 to 2010. The chart was created by the Curious Cat Economics Blog based on UN data. You may use the chart with attribution.

     

    China has finally actually taken the lead as the largest manufacturer in the world. Reading many news sources and blogs you may have thought the USA lost the lead a couple of decades ago, but you would be wrong. In 1995 it looked like Japan was poised to take the lead in manufacturing production, but they have slumped since then (still they are solidly the 3rd biggest manufacturer). China has been growing manufacturing output enormously for 20 years, and they have now taken the lead from the USA.

    As I have been saying for years the biggest economic story about manufacturing is the dramatic and long term increase of productive capacity in China. The next is the continuing global decline in manufacturing employment: increased productivity has seen production rise year after year and employment fall. What is the next most interesting stories is debatable: I would say the continuing failure to appreciate the continuing strong manufacturing production increases by the USA. Another candidate is the the decline in Japan. Another is the increase in several other counties: Korea, Brazil, India, Indonesia…

    Looking more closely at some of the long term data shows how much China stands out. From 1980 to 2010 China increased output 1345%. The total top 10 group increased output 302% (all data is in current USD so inflation accounts for most of the gain, 100 1980-USD equal 280 2010-USD). From 1995 to 2010 China increased output 543%. The group increased 64%. For 1980-2010, the results for the other 3 largest manufacturing countries are: USA up 218%, Japan up 261% and Germany up 148% (other countries doing very well are Korea up 1893% and India up 737%). Looking at the last half of that period, from 1995-2010 the: USA up 44%, Japan down 11% and Germany up 19%.

    One thing to remember about adjusting manufacturing data for inflation is that often the products created in later years are superior and cost less. So that a computer manufactured in 1990 which added $5,000 to the manufacturing total is far inferior to one in 2010 that added just $1,000. This point is mainly to say that while the increase in manufacturing in real (not inflated dollars) is not as high as it might seem the real value of manufacturing good did likely increase a great deal. But the economic data is based on price so manufacturing increases are reduced by cost decreases. Computers are the most obvious example, but it is also true with many other manufactured goods.

    You can that the other largest manufacturing countries fail to keep up with the increases of the entire group of the top 10. China’s gains are just too large for others to match. If you remove China’s results (just to compare how the non-China countries are doing) from 1980-2010 the increase was 216% (so compared to the other 9 top manufacturers over this period the USA was even and Japan better than the average and Germany was worse). And from 1995-2010 the top 9 group (top 10, less China) increased just 28%: so the USA beat while Japan and Germany did worse than the other 9 as a group.

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  • Taking a Look at Some Dividend Aristocrats

    See the full list of Dividend Aristocrats below. The stocks in this index are companies within the S&P 500 that have increased dividends every year for at least 25 consecutive years. After 10 were added and 1 removed, this month, there are now 51 companies included (so just over 10% of all S&P 500 stocks) – and remember many S&P 500 stocks haven’t existed for 25 years, or pay no dividend today, or didn’t 10 or 20 years ago (Google, Apple, Intel, …). It is surprising so many companies have successfully done this.

    I’ll take a look at a few of them here (I looked at the new additions in my previous post: Investing in stocks that have raised dividends consistently).

    Stock Yield
    		div/share 2011 div/share 2000 % increase
    3M (MMM) 2.8% $2.20 $1.16 90%
    Aflac (AFL) 3.2% $1.23 $0.165 645%
    Abbott Laboratories (ABT) 3.5% $1.92 $0.74 159%
    Cincinnati Financial (CINF) 5.3% $1.60 $0.69 132%
    Coca-Cola Co (KO) 2.8% $1.88 $0.68 176%
    Exxon Mobil Corp (XOM) 2.4% $1.85 $0.88 110%
    Johnson & Johnson (JNJ) 3.6% $2.25 $0.62 263%
    Kimberly-Clark (KMB) 3.9% $2.80 $1.08 159%
    Medtronic (MDT) 2.8% $0.94 $0.18 417%
    Procter & Gamble (PG) 3.2% $2.06 $.67 207%

    Just looking at this data Aflac sure looks appealing. Having both a high yield and strong growth is an appealing combination. And Warren Buffet agree (he owns quite a bit) which is also reassuring (he also owns a large stake in Coke). Of course strong growth over the last 11 years won’t necessarily repeat (in fact it gets much harder). On the other had some slow growth companies would likely continue slow growth (at best): Exxon Mobil, 3M…

    Really almost all of these stocks are pretty attractive. Medtronic, Johnson & Johnson and Abbot Laboratories look particularly appealing to me (along with Aflac and Kimberly-Clark). I would have to do more research on any of these (other than Abbot Laboratories, which I already own) before deciding to buy, but they sure look good as safe long term investments. Health care is a growing need (in the USA and globally). It is true the costs in the USA have to be reduced, and this could make things more difficult for companies in the health care industry.

    Related: Sleep well investing portfolio – Looking for Dividend Stocks in the Current Extremely Low Interest Rate Environment – Is the Stock Market Efficient?

    Full list of Dividend Aristocrats, an index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years.

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  • Global Wind Energy Capacity Exceeds 2.5% of Global Electricity Needs

    chart showing installed wind energy capacity by Country from 2005-2011Chart by Curious Cat Economics Blog using data from the Wind Energy Association. 2011 data is for the capacity on June 30, 2011. Chart may be used with attribution as specified here.

    _________________________

    In 2007 wind energy capacity reached 1% of global electricity needs. In just 4 years wind energy capacity has grown to reach 2.5% of global electricity demand. And by the end of 2011 it will be close to 3%.

    By the end of 2011 globally wind energy capacity will exceed 240,000 MW of capacity. As of June 30, 2011 capacity stood at 215,000. And at the end of 2010 it was 196,000.

    As the chart shows Chinese wind energy capacity has been exploding. From the end of 2005 through the end of 2011 they increased capacity by over 3,400%. Global capacity increased by 233% in that period. The 8 countries shown in the chart made up 79% of wind energy capacity in 2005 and 82% at the end of 2010. So obviously many of other countries are managing to add capacity nearly as quickly as the leading countries.

    USA capacity grew 339% from 2005 through 2010 (far below China but above the global increase). Germany and Spain were leaders in building capacity early; from 2005 to 2010 Germany only increased 48% and Spain just 106%. Japan is an obvious omission from this list; given the size of their economy. Obviously they have relied heavily on nuclear energy. It will be interesting to see if Japan attempts to add significant wind and solar energy capacity in the near future.

    Related: Nuclear Power Production by Country from 1985-2009 – Top Countries For Renewable Energy Capacity – Wind Power Capacity Up 170% Worldwide from 2005-2009 – USA Wind Power Installed Capacity 1981 to 2005 – Oil Consumption by Country 1990-2009

  • USA Unemployment Rate Drops to 8.6%

    The unemployment rate fell from 9.0% to 8.6% in November, however that is not an accurate representation of employment in the USA. The news is good, but very mildly good, while a decrease in the unemployment rate by 40 basis points would lead you to believe the improvement was dramatic. Nonfarm payroll employment rose by 120,000 which is about the number needed to keep up with population growth each month. Employment continued to trend up in retail trade, leisure and hospitality, professional and business services, and health care. Government employment continued to trend down.

    The change in total nonfarm payroll employment for September was revised from +158,000 to +210,000, and the change for October was revised from +80,000 to +100,000. This means this report shows an increase of 192,000 jobs which is pretty good news (especially for those that think the economy has been in a recession – it has not).

    One year ago the unemployment rate stood at 9.6%.

    The number of unemployed persons, at 13.3 million, was down by 594,000 in November. The labor force, which is the sum of the unemployed and employed, was down by a little more than half that amount. What this means is the reduction in the unemployment rate was largely due to the decrease in those actively looking for jobs.

    Among the major worker groups, the unemployment rate for adult men fell to 8.3% in November. The jobless rate rates for adult women (7.8%), teenagers (23.7%), African-Americans (15.5%), and Hispanics (11.4%) showed little or no change. The jobless rate for Asians was 6.5%.

    The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.7 million and accounted for 43.0% of the unemployed. This is one of the numbers that has to come down drastically for the job situation to really show good improvement.

    Related: Jobs News in the USA is not Good, Unemployment Remains at 9.1% (Aug 2011) – USA Economy Adds 151,000 Jobs in October, Unemployment Rate Steady at 9.6% (Oct 2010) – Unemployment Rate Reached 10.2% (Oct 2009) – Over 500,000 Jobs Disappeared in November (2008)

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  • Where are Profit Margins Headed?

    Where is the economy headed? With the troubles of huge debt (by governments and consumers) and the possible collapse of the Euro it is very hard to be certain. And where is the stock market headed? That is also difficult to predict. Of course, where the stock market is headed in the short term is never easy to predict. If you can predict, you should be rich (though it likely takes a bit more, knowing how much to risk…).

    At least by knowing what has happened you can be ahead of where many people are. The USA economy has not been in a recession, we have actually been growing. Just doing so very slowly. And doing so without many added jobs. Companies however, have been doing very well.

    U.S. companies’ ability to squeeze more profit from each dollar of sales is pushing earnings higher, even as the economy has grown at a below-average clip since the recession ended in June 2009.

    For investors knowing if this is a positive trend that can be expected to continue or an aberration is key. But I have no way of knowing. My guess is it is at least partially something that will continue (but maybe a portion of the gains are an aberration) – but this is just a guess. This bloomberg article looks more at the issue.

    Grantham, who called corporate profits “freakishly high” in an August commentary, sees wide margins as an aberration. Some of his competitors say changes in the economy and the way firms operate could keep them near peak levels for another year or two. “We don’t think they have to fall,” Doll, whose New York- based firm is the world’s largest asset manager, said in a phone interview. BlackRock oversees $3.35 trillion.
    …
    The margins of non-financial companies in the U.S., a widely used measure of profitability, reached 15 percent in the third quarter, according to data from Moody’s Analytics Inc. in West Chester, Pennsylvania. That was the highest level since 1969. When the recession ended in the second quarter of 2009, the comparable number was 8.7 percent.

    The most compelling data supporting my belief is the long term trend.

    Profit margins have been trending higher since the mid-1980s, said Chris Christopher, an economist at IHS (IHS) Global Insight, who has written on the subject. Quarterly margins peaked at 11.9 percent in the 1980s, 13.6 percent in the 1990s and 14.5 percent in the most recent decade, Moody’s data show.

    But where this trend ends and starts reversing won’t be obvious until years after it happens. But investors that can predict (or guess) margin changes will likely be rewarded financially.

    Related: The Economy is Weak and Prospects May be Grim, But Many Companies Have Rosy Prospects – Is the Stock Market Efficient? – Investment Risk Matters Most as Part of a Portfolio, Rather than in Isolation

  • Manufacturing Employment Data: USA, Japan, Germany, UK… 1990-2009

    I try to find global economic data on manufacturing and manufacturing jobs, but it isn’t easy. This is one of the areas I will be working on with the time I have freed up by moving to Malaysia (and taking a “sabbatical” [it isn’t really a sabbatical, I guess, just me studying and working on what I want to instead of what someone pays me to]).

    I found some interesting data from the USA census bureau on manufacturing employment in several countries (it would be interesting to see the data for more countries but for now I am limited to this data). Sadly they just use indexed data (I would rather see raw data). This data for example lets you see the changes in countries but I don’t see any way to compare the absolute values between countries – all you can compare is the changes between countries.

    The data is all indexed at 2002 = 100. Interestingly the USA has increased output per hour much more than any other country since 2002. The USA index stands at 146, the next highest is Sweden at 127 then the UK at 120. Italy is the only country tracked that fell since 2002, to 94. Japan (the 3rd largest manufacturer and 2nd largest of the countries include, China isn’t included) only increased to 113. Germany (4th and 3rd) increased to 111.

    The data also lets you look back from 1990 to 2002 and again the USA has increased productivity very well (2nd most) – the value in 1990 was 58. Sweden actually had the largest gain from 1990-2002, rising from 49. In 1990 Japan stood at 71 and Germany 70.

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  • Looking at the Value of Different College Degrees

    Georgetown University Center on Education and the Workforce has produced a new report looking at the value of different college degrees in the USA. I have seen a great increase in discussions of the “bubble” in education. Those articles often say a college degree doesn’t assure the success it used to. The data I review seems to show extremely large benefits for those with a college degree (higher salaries but, much more importantly, in my opinion, they also have much lower unemployment rates).

    Those benefits are greatest for several majors including science, math and engineering. The problem I see is not so much that significant benefits are lacking for college degrees but the huge increases in costs of getting a degree are so large that for some majors the cost is just so large that even with the benefits it is arguable whether it is worth the cost (while a few decades ago the benefits were universal and so large the economic benefit was not debatable).

    The authors of the report found that all undergraduate majors are worthwhile, even taking into account the cost of college and lost earnings. However, the lifetime advantage ranges from $1,090,000 for Engineering majors to $241,000 for Education majors. As I have written frequently on the Curious Cat Science and Engineering blog, engineering degrees are very financially rewarding.

    The top 10 majors with the highest median earnings for new graduates are:

    • Petroleum Engineer ($120,000)
    • Pharmacy/pharmaceutical Sciences and Administration ($105,000)
    • Mathematics and Computer Sciences ($98,000)
    • Aerospace Engineering ($87,000)
    • Chemical Engineering ($86,000)
    • Electrical Engineering ($85,000)
    • Naval Architecture and Marine Engineering ($82,000)
    • Mechanical Engineering, Metallurgical Engineering and Mining and Mineral Engineering (each with median earnings of $80,000)
    chart showing the salaries by major in the USA (2009)
    Chart of salaries (25th and 75th percentile) by major in the USA based on data from 2009

    Related: 10 Jobs That Provide a Great Return on Investment – Mathematicians Top List of Best Occupations – New Graduates Should Live Frugally

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  • Consumer and Real Estate Loan Delinquency Rates from 2000 to 2011

    chart showing loan delinquency rates from 2000-2011 in the USA
    Chart showing loan delinquency rates from 2000-2011, shows seasonally adjusted data for all banks for consumer and real estate loans. The chart is available for use with attribution. Data from the Federal Reserve.

    Residential real estate delinquency rates increased in the first half of 2011 in the USA. Other debt delinquency rates decreased. Credit card delinquency rates have actually reached a 17 year low.

    While the job market remains poor and the serious long term problems created by governments spending beyond their means (for decades) and allowing too big to fail institutions to destroy economic wealth and create great risk for world economic stability the USA economy does exhibit positive signs. The economy continues to grow – slowly but still growing. And the reduction in delinquency rates is a good sign. Though the residential and business real estate rates are far far too high.

    Related: Consumer and Real Estate Loan Delinquency Rates 2000-2010 – Real Estate and Consumer Loan Delinquency Rates 1998-2009 – Government Debt as Percent of GDP 1998-2010 for OECD

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  • Chart of Largest Petroleum Consuming Countries from 1980 to 2010

    chart of petroleum consumption by country 1980-2010
    Chart of petroleum consumption by country 1980-2010 by the Curious Cat Investing and Economics Blog. The chart may be used with attribution.

    The USA remains, by a huge margin, the largest consumer of petroleum products (motor gasoline, jet fuel, liquefied petroleum gases, residential fuel oil…) using 22% of the total (with about 4.5% of the population). From 1980 to 2010 the global consumption increased 38% to 87 million barrels a day.

    From 1980 to 2010 USA consumption increased 12% (so less than global consumption). Meanwhile, Germany, Japan and France decreased petroleum use by 19%, 17% and 10% respectively. Many countries have very low use in 1980 and have grown their economies dramatically over this period and increased petroleum use dramatically also: India up 433%, China up 411%, South Korea up 360%.

    Africa, in total, used 3.3 million barrels a day in 2010, up 120% from 1980. Africa used 73% of what Japan used in 2010 and 17% of what the USA used and 50% more than Canada. The data shows no sign of declining petroleum consumption on a global basis. The USA uses as much as China, India, Brazil and Africa combined. I believe, in 2015 those countries (by which I mean all the countries in Africa too, not that Africa is a country, which of course it is not) will use more than the USA (and likely show significant growth from 2010 levels).

    Data is from the US Energy Information Agency.

    Related: Oil Production by Country 1999-2009 – Top Countries For Renewable Energy Capacity – Chart of Nuclear Power Production by Country from 1985-2009 – Increasing USA Foreign Oil Dependence In The Last 40 years

  • Jobs News in the USA is not Good, Unemployment Remains at 9.1%

    This was a bad month for jobs in the USA. Not only did the U.S. Bureau of Labor Statistics report that the number of jobs remained at the same level as last month (125,000 additional jobs are needed for population growth, on average and we have huge losses from the credit crisis recession that have to be gained back) the last 2 months were revised down. The change in total nonfarm payroll employment for June was revised from
    a gain of 46,000 to a gain of 20,000, and the July was revised down from gaining 117,000 job to gaining
    85,000. That results in a total loss for this report of 58,000.

    Still much better than the huge losses of several years ago but, along with the last few months, not a good sign for short term job growth. And the failure to address decades of favors given by politicians to too big to fail banks may actually create serious problems much sooner than most people feared. Pretty much everyone knew that the failure to address the main cause of the credit crisis was setting us up for again having the economy suffer huge blows due to the behavior of too big to fail institutions but I, and I think most people, thought it would be at least 5 years away and maybe even 10 before we had to seriously pay for the failures of our politicians to address this problem they (and their predecessors created).

    It really seems like politicians don’t understand that their predecessors (decades ago) could afford to payoff large political donors and avoid dealing with problems and the enormous amount of wealth the economy was generating would let us prosper (even with lousy leadership), but that is no longer the case. The USA has used up huge economic advantages and that easy time is not coming back. Sadly the main hope for the USA is that other countries leaders create enough waste that the USA can remain competitive with all the waste our create (extremely lousy health care system, for example). It seems the American public doesn’t understand either, if anything we are electing even less intelligent and capable leaders today (over the last 10 years).

    The USA has 14 million unemployed. Among the major worker groups, the unemployment rates for adult men was 8.9%, adult women 8.0% and teenagers 25.4%, whites. Of those 14 million the number of long-term unemployed (those jobless for 27 weeks and over) was about unchanged at 6 million in August.

    The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.4 million to 8.8 million in August. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

    The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour over the month to 34.2 hours. The manufacturing workweek was 40.3 hours for the third consecutive month; factory overtime increased by 0.1 hour over the month to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged down to 33.5 hours in August, after holding at 33.6 hours for the prior 6 months.

    As bad as this news is, it could be much worse. The economy is actually growing (very slowly), probably. Many companies are actually still very profitable (I am not counting companies that have fake profits with congress approved ability to report fake values for their assets – Congress granted their too big too fail donors, this, and many other favors while most others are left out in the cold). The wealth in the USA, even after we have been consuming our capital to live beyond what we earn each year (for decades) is still extremely high. This allows us to live well and invest even with many bad practices in place. We continue to have many excellent companies doing great work and providing great jobs. Even with all the problems in the USA there are few countries that are in as enviable an economic position. The biggest problem I see is we have been squandering those advantages far too easily and quickly for far too long. That leaves us much more economically venerable than we need to be.

    Related: Paying Back Direct Cash Bailouts from Taxpayers Does not Excuse Bank Misdeeds – USA Unemployment Rate at 9.6% (after losing 54,000 job in Aug 2010)