The flash manufacturing sector Purchasing Managers’ Index (PMI) for the UK fell back to 47.3, its lowest level since May but all of the other countries and the Euro-zone that have a flash indicator showed an improvement over the July reading. India continues to have the strongest PMI with Australia, the Euro-zone and the USA all having readings above the 50 threshold.
The lower flash manufacturing PMI for the UK came as a result of the sharpest decline in new orders since April, in the face of weak global demand that, in turn, seems to be driven by the various US tariff announcements. Although output is still falling marginally, the pace of this was unchanged from the July reading; employment in the UK manufacturing sector fell again but we expect this to lag any cycle. The index was higher than it might otherwise have been because of lengthening supplier delivery times which grew at the fastest pace since December 2024 thanks to container freight delays.
The Euro-zone saw its first positive reading (50.5) since June 2022 (38 months), thanks in part to an acceleration of growth in output which was the most rapid for 41 months. This was supported by the first increase in new orders since April 2022, despite a fall in new export orders which was the sharpest in five months. As in the UK, manufacturing employment for the Euro-zone as a whole is still falling and suppliers delivery times increased for the 3rd month running.
At this stage, we only have separate reports for France and Germany, with both of these seeing their flash PMI improve to 49.9 – a fraction below the key threshold of 50. In Germany, output growth accelerated to its fastest pace in 41 months, helped by another improvement in new orders (interestingly, the service sector in Germany saw orders fall). However, the rate at which employment is falling accelerated but this may just be a cycle issue.
The picture for France is slightly different despite ending up with the same PMI reading; here, output is still just negative, although at a slower rate than in July. Although the report is not entirely clear, it seems that the improved reading is a combination of not repeating July’s sharp drop in orders and lengthening suppliers delivery times.
In Asia, Japan had a similar experience to the two European economies, with their flash manufacturing PMI improving to 49.9 thanks to output returning to growth after a weak July result and despite another fall in orders, albeit at a slower pace than in July. India saw its already very strong PMI increase further with the reading of 59.8 its highest since January 2008 – this was driven by an acceleration in the pace of growth in both output and new orders. Australia also saw its reading increase, with the August figure of 52.9 the best since we started tracking this country in 2024.
Finally, there was a notable turnround in the USA where the flash manufacturing PMI improved to 53.3 – its highest reading since May 2022 and up from 49.8 in July. The output element was the main area of improvement, with this sub-index also at its highest for 39 months but there was also an acceleration in orders growth that was at its fastest pace since February 2024. The index was also helped on its upwards trend by an expansion of manufacturing employment.
You can access these latest flash reports on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.