The flash manufacturing sector Purchasing Managers’ Index (PMI) numbers for June were mostly an improvement on the May figures but not necessarily yet into positive territory. This is true for the UK where the index rose to 5-month high of 47.7 thanks to a slower pace of decline for output and despite another export-led reduction in orders.
Over the past couple of months the final figure for the UK has been quite a bit higher than the flash estimate, so it will be interesting to see if this can be repeated. The flash estimates are based on 80-90% of the final number of responses. The speed at which export sales fell was the slowest for 5 months, with US tariffs and increased uncertainty the main reason for this.
The Euro-zone shows an interesting contrast, with the overall flash manufacturing PMI unchanged at 49.4 (implying a modest contraction in activity). At the regional level, growth in output eased slightly but this was balanced by new orders moving to a neutral position after more than 3 years of contraction. There was still a reduction in employment, although this will normally lag the economic cycle, so that is not a surprise. The index was also helped upwards by a lengthening of suppliers delivery times after 4 months of shortening.
Within the Euro-zone, we only have separate flash reports for France and Germany, with contrasting results. In France, the flash manufacturing PMI fell to a 4-month low of 47.8 thanks mainly to a sharp turnaround in output which was also below the 50 threshold; however, there was also the quickest reduction in new orders since February as manufacturers reported grappling with intense international competition, slow decision making among clients and automotive sector weakness.
In contrast, Germany saw its flash PMI improve to a 34-month high of 49.0, thanks to a combination of output growing with the strongest reading for this element of the calculation for 39 months and new orders moving into positive territory for the first time in over 3 years. Manufacturers reported a solid up-tick in export orders, although, like France, employment is still falling.
Only 3 Asian countries have a flash manufacturing PMI and thanks to Japan (50.4) returning to positive territory for the first time since a brief spike in May 2024 (apart from that the negative run goes back to November 2022), all of them were above the crucial 50 threshold. India is still leading the way with their reading increasing to 58.4 – their best since April 2024 – as the pace of output growth accelerated. Although Australia’s flash reading was unchanged from the May result at 51.0, this extends their run of positive numbers to six months as a marginal return to output growth helped to balance a fall in export orders.
Finally, the USA had a similar pattern to that of Australia, with the overall flash manufacturing PMI unchanged from May at 52.0, despite output returning to growth at a 4-month high rate. Indeed, it is not clear from the comments about the US what has balanced out this improvement as employment is noted as having increased at the fastest rate for 12 months and new orders growth slipped “only marginally” from the 3-month high in May.
You can access the individual country reports on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.