The global manufacturing sector
continued to cool at the start of H2 2011. Growth of production slowed to a near
standstill, as levels of incoming new business declined slightly for the first
time in over two years.
At 50.6 in July, the JPMorgan Global
Manufacturing PMI (Purchasing Managers' Index) fell to its lowest level since
July 2009, the first month of the ongoing recovery. The headline PMI has
signalled a substantial easing in
the overall rate of expansion since hitting a near-record high only five months
Manufacturing production rose for
the twenty-sixth consecutive month in July, although the rate of increase was
the slowest since the opening month of this sequence. Among the major economic
regions covered by the survey, output expansion was the slowest in 25 months in
the US, hit a 20-month low in India and eased to the weakest in their respective
recoveries in the Eurozone and the UK (which extended to 24 and 26 months
respectively). Meanwhile, the China Output Index remained below the 50.0 mark
for the second month running.
Japan bucked this trend, however,
with output rising to the greatest extent since February. Total new orders
posted a negligible decline in July. New work fell in the US, the Eurozone and
the UK. Rates of increase eased
to a near-standstill in China and to the weakest in the ongoing 28-month period
of expansion in India. Japan saw new business rise at a faster pace.
July data signalled that the growth
rate of international trade volumes was unchanged from the previous month's
two-year low. The rate of increase eased in developed markets, whereas emerging
nations saw a further modest reduction in new exports.
Manufacturing employment rose for
the twentieth consecutive month in July. However, jobs growth slipped to a
one-and-a-half year low that was below the average for the current sequence of
Employment rose at a weaker pace in
the US and the Eurozone. The extent of the drop in the ISM US Manufacturing
Employment Index was the steepest since October 2008. Japan and India saw
staffing increase for the first time four and nine months respectively. Job
losses were seen in China for the second month running, and in the UK for the
first time since March 2010.
Slower global growth and recent
falls in the price of a number of commodities led to a further easing in input
cost inflation. The latest increase in purchase prices was the least marked in a
year. Slower cost increases were seen in the US, the Eurozone, Japan and the UK.
In contrast, inflation picked up across China and India.
The Global Report on Manufacturing
is compiled by Markit based on the results of surveys covering over 7,500
purchasing executives in almost 30 countries. Together these countries account
for an estimated 86% 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.