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July saw growth of the global manufacturing sector cool further from the
post-recession peak reached in April and the rate of expansion eased to a one
year low. The JPMorgan Global Manufacturing PMI (Purchasing Managers' Index), published Monday,
posted 54.3, its lowest reading in eight months but still consistent with a
solid rate of expansion.
The headline PMI has signalled an improvement in operating conditions in each
month since July 2009. Underlying the ongoing recovery signalled by the
manufacturing PMI were solid gains in output, new orders and employment.
Manufacturing production increased for the fourteenth month running in July.
Although the rate of expansion eased to a one year low, it was above the average
for the survey history.
National PMI data signalled that output growth eased in the US, Japan, the UK
and emerging markets. The rate of expansion improved slightly in the Eurozone,
rising to a three-month high. Supporting the latest increase in output was a
further rise in the level of incoming new work during July. However, the rate
of growth in new order books eased to its weakest since July 2009, when the
current thirteen-month sequence of expansion began. The slowdown in new order
growth was mainly centred on the US, China and Japan. In contrast, both the
Eurozone and the UK saw stronger rates of increase.
Growth of international trade flows also eased further in July. The rate of
expansion in new export orders was the slowest in seven months, having eased
sharply since hitting a survey record high in April. The Eurozone, Japan and the
UK all reported weaker rates of increase in July, but growth accelerated in the
US.
Global manufacturing employment rose for the seventh successive month in
July, with the rate of jobs growth picking up slightly from June's three-month
low. Staffing levels rose at a faster pace in the US, the Eurozone and Japan.
China and the UK both recorded further increases in employment, but their
respective rates of job creation eased slightly over the month.
July data pointed to the slowest rate of increase in average purchase prices
since last November, with the rate of inflation below the survey average for the
first time in eight months. The slowdown in cost pressures was mainly centred on
the Eurozone, Japan and China (with China the only nation covered to report a
decline in purchase prices). In contrast, the US saw costs rise at a slightly
sharper pace in July.
Apart from higher raw material prices, part of the latest inflation of costs
reflected ongoing supply-chain disruption. This was highlighted by a further
increase in average vendor lead times.
Commenting on the survey, Joseph Lupton, Global Economist at JPMorgan, said: "The July PMI data are consistent with
global manufacturing activity decelerating from the post-recession boom seen
over the past year. However, rates of expansion in new orders, output and
employment all remained above their respective survey averages. As such, while
the loss of momentum will be quite noticeable, today's data confirms our view
that the pace of growth will remain solid into the second half of this year."
The Global Report on Manufacturing is compiled by Markit based on the results
of surveys covering over 7,500 purchasing executives in 29 countries. Together
these countries account for an estimated 90% of global manufacturing output.
Questions are asked about real events and are not opinion based. Data are
presented in the form of diffusion indices, where an index reading above 50.0
indicates an increase in the variable since the previous month and below 50.0 a
decrease.
