Source: Markit

Global manufacturing PMI (Purchasing Managers' Index) data signalled that the recovery in production extended into its fifteenth consecutive month in August. However, there were further signs that the upturn in the sector was losing momentum, reflecting slower growth of new orders and a waning boost from inventory rebuilding.

The JPMorgan Global Manufacturing PMI fell to a nine-month low of 53.8 in August, down further from April's near six-year high. The PMI has remained above the 50.0 no-change level for fourteen months running.

Although growth of global manufacturing output remained robust in August, the rate of expansion eased slightly to a thirteen month low. This mainly reflected a broad-based slowdown of the recovery ongoing in Europe, with output growth easing to a three-month low in the Eurozone and to its weakest since September 2009 in the UK. The expansion in Japan was the slowest for fourteen months. However, the US and China - - two of the nations leading the slowdown in recent months - - saw their respective PMI Output Indexes rise in August.

The slowdown in growth of new orders was more pronounced than that signalled for output. The level of new work received increased only moderately since July, and at the weakest pace during the current fourteen-month period of expansion. Growth of new orders slowed in the US, the Eurozone and the UK, whereas the trend improved in China. Japan saw a decline in new work. Meanwhile, the rate of increase in global manufacturing new export orders eased to a thirteen-month low.

The cyclically sensitive new orders-to-inventory ratio dropped sharply to a seventeen-month low in August, suggesting output growth may ease further in the coming months.

Manufacturing employment increased for the eighth successive month in August. Moreover, the rate of jobs growth accelerated to its fastest since May. Staffing levels rose at the quickest pace in the US, were jobs growth hit its highest since December 1983.

Employment also rose in the Eurozone, China and the UK, but fell in Japan.

After easing to an eight-month low in July, global manufacturing purchase price inflation accelerated in August. The principal drivers of the faster rate of increase in costs were the US and China, as input price inflation slowed in the Eurozone, Japan and the UK. Part of the increase in costs reflected ongoing supply-chain pressures in August. This was highlighted by a further historically marked lenghtening of vendor lead times.

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "August PMI data suggest that the manufacturing recovery slowed further from the boom rates seen earlier in 2010, as the boost from inventory rebuilding waned and global trade flows remained muted. However, signs are that the slowdown in Q3 will not be too excessive. While conditions will continue to cool as the year progresses, there looks to be sufficient traction remaining to sustain the recovery."