There was a noticeable improvement in the global Purchasing Managers’ Index (PMI) for manufacturing (published by S&P Global) which moved back above the 50 threshold and reached its highest level since May 2024. However, as always, this hides a diversity of trends and the UK stands out as one of the weakest results in August.
The global average, based on 31 countries (see below) moved up to 50.9, its highest level since recording 51.0 in May 2024. This came as output, new orders and employment all returned positive values. Output is noted as having registered “solid improvement” for both investment and consumer goods, while growth was “milder” for producers of intermediate goods. Although total new orders increased compared to July, new export business contracted for the 5th month in a row in the face of tariff concerns. Although this is a positive indicator, the report also notes that business optimism (not part of the PMI calculation) edged higher but not by enough to end what is now a 17-month run of readings below the long-run survey average.
As mentioned in the introduction, the UK did not share in this positive news; our manufacturing sector PMI slipped again to 47.0 which is lower than the flash reading that we reported two weeks ago, its weakest since May and the second lowest among the countries and regions that we cover in this report.
This deterioration was led by a sharp drop in new orders, both domestically and for export, driven by weak market conditions, tariff uncertainties and downbeat client confidence. In parallel, the fall in output was slower but still extended the negative run to 10 months; in contrast to the global picture, while consumer and investment goods saw output falling modestly, intermediate goods producers registered a second consecutive marginal increase. Manufacturing employment fell and suppliers’ delivery times lengthened (adding positively, but falsely to the PMI) thanks to shipping delays, vendor capacity issues, transportation re-routing and global material shortages.
In contrast, the Euro-zone moved in-line with the global trend, with the overall manufacturing PMI getting up to 50.7 – this is the first time it has been positive since June 2022. This was driven by the strongest increase in output for 41 months and the first increase in new orders for nearly 3½ years, although this was entirely domestic as new export business fell for the 2nd month in a row. The index was also helped (again perversely) by a further lengthening of suppliers’ delivery times to their longest since November 2022. While employment in the sector fell for the 27th consecutive month, this was at the slowest pace in that period.
Looking at the individual countries, of the 8 covered by the PMI report for the Euro-zone, 6 had readings above 50 with Germany (49.8) and Austria (49.1) the exceptions to the trend. Similarly, 6 countries had higher readings than in July, with Ireland (down 1.6 points to 51.6) and the Netherlands (unchanged at 51.9) bucking this trend.
The picture is rather different for the other 5 EU countries that have a PMI survey; among these, only Sweden has a reading above 50, with a dip for Hungary moving them from positive to negative territory in August. Czechia also saw its already negative reading slip back, while Romania and Poland had improved readings compared to July – however, for the latter, this was not enough to prevent them from once again having the lowest manufacturing PMI in our report.
There were mixed fortunes for the other three European countries that we cover, although all of them continue to have negative PMI values; Turkiye had a modest improvement compared to July and Switzerland edged up, but Kazakhstan registered the sharpest fall among the countries and regions that we cover in this note (down by 2.0 points to 47.9 and their weakest since March 2022).
There are also some contrasts in Asia where 7 of the 8 countries/region had a higher manufacturing PMI than in July – the small fall in Pakistan was the exception to this trend – but only 5 are in positive territory with readings above 50, with Japan, South Korea and Taiwan being the ones whose PMI is still below the threshold. The improvement for China moved them back into positive territory, having alternated around this mark since April. The other notable feature in this part of the world is that India (59.3, its highest for 17½ years) continues to have the strongest manufacturing PMI in our report.
The sharpest increases in the PMI compared to July come in the Americas with a 3.2 point rise for the USA and a 3.4 point higher reading for Columbia – the largest in this report. There were also significant increases for Canada and Mexico, with only Brazil seeing a lower figure. In terms of levels, the changes in Mexico and the USA took those countries back above the 50 threshold, to join Columbia, while Brazil and Canada are still showing contraction in their manufacturing sectors.
Overall, of the 29 countries and 2 regions that we cover in this report (excluding the global average but including the Euro-zone and ASEAN regions and their constituent countries), 23 were higher than in July, one was unchanged (the Netherlands) and only 7 had a lower PMI reading. There were 16 above the threshold (50) which signals expansion of activity in the sector, with the other 15 below this level, pointing to contraction.
The individual S&P Global PMI reports are available to download on their web-site at https://www.pmi.spglobal.com/Public/Release/PressReleases but we also have a summary charts report which is available to download below. Please note that the PMI readings for Hungary, Sweden and Switzerland are not compiled by S&P Global but can be found with an appropriate internet search (it also means that they are not part of the global PMI calculation).