The rate of expansion in global manufacturing production accelerated slightly during May, as companies responded to a modest improvement in inflows of new orders. However, the trend in international trade flows remained weak, as levels of new export business decreased for the first time in almost two years.
At 51.2 in May, the JPMorgan Global Manufacturing PMI (purchasing managers' index) – a composite index1 produced by JPMorgan and Markit in association with ISM (Institute for Supply Management) and IFPSM (International Federation of Purchasing and Supply Management) – ticked higher from April’s 21- month low of 51.0. The headline PMI has signalled expansion in each month since December 2012.
May data also saw rates of growth in manufacturing production and new orders both accelerate from April’s recent lows. Spain, Italy and Vietnam were at the top of the PMI output growth league table.
The US also remained a prime driver of the expansion, despite seeing its rate of output growth ease to a five-month low. Japanese production returned to expansion following April’s decline, whereas China slipped into contraction for the first time in the year-to-date.
Markit said that US business volumes increased at the slowest rate since the start of 2014. Softer growth of incoming new work partly reflected an overall decline in new export sales for the second month running. Nonetheless, payroll numbers rose at a solid pace, with the latest upturn in manufacturing employment the fastest for six months. Meanwhile, both input prices and output charges increased at modest rates during the latest survey period.
The UK manufacturing sector saw further modest expansions of both output and new orders in May, as a solid domestic market continued to offset lacklustre demand from overseas. The consumer goods sector remained the stand-out performer, while investment goods producers fared better than in April. Negative news came from the intermediate goods sector, where the downturn in output continued.
The recovery in the Eurozone was ongoing in May, although the rate of expansion was a shade weaker than in April. Alongside the robust growth in Spain and Italy, production increased in the Netherlands, Germany and Austria. France contracted again, but the rate of decline eased sharply.
Elsewhere in the global manufacturing sector, India, Poland and the Czech Republic recorded robust expansions. Contractions were seen in Russia, Taiwan, South Korea and Brazil.
With the upturn in the sector continuing, companies were encouraged to further raise staffing levels, with employment rising for the twenty-second month in a row. Moreover, the pace of jobs growth was the fastest since February.
David Hensley, director of Global Economics Coordination at JPMorgan, said: “May PMI data signalled mild improvements in both the rates of expansion in global manufacturing production and new orders. Although the trend in international trade flows remains weak and a drag on the sector’s improvement, the bounces in the other indices still put us on course for a mid-year growth acceleration. With this in mind, manufacturers also raised the pace of job creation during the latest survey month.”
The Global Report on Manufacturing is compiled by Markit based on the results of surveys covering over 10,000 purchasing executives in over 30 countries. Together these countries account for an estimated 89% of global manufacturing output.