The flash manufacturing sector Purchasing Managers’ Index (PMI) for the UK eased down to 45.1 in May, although it is worth noting that in April, the final number was noticeably better than the flash estimate. The flash estimates in the Euro-zone edged up from the April figures, those in Asia were broadly unchanged, and the US improved significantly.
For the UK, the output element of the calculation fell was at its weakest since October 2023 and although concerns over US tariffs have eased among UK companies, many manufacturing firms were still reporting that global uncertainty was affecting confidence. Orders continue to decline, with export demand noticeably weak – this is largely the impact of US tariffs on overseas customers. Manufacturers reduced employment levels at the fastest pace since the pandemic in the face of weak demand and higher costs. All this was balanced (albeit perversely) to some extent by the sharpest lengthening of suppliers delivery times since February 2024 in the face of international shipping delays and worsening port performance.
In contrast, although still just below the threshold, there was another improvement in the flash PMI for the Euro-zone to 49.4 which is the highest since August 2022. Although unchanged from the April level, the output element of the calculation is showing growth for the 3rd month in a row, despite new orders only at a neutral level and a small fall in employment. For the Euro-zone, suppliers delivery times shortened, albeit modestly.
While both France and, to a slightly lesser extent, Germany (the only two Euro-zone countries for whom we have a flash indication) saw a less negative manufacturing PMI than in April at 49.5 and 48.8 respectively, their route to this is different. For France, there was a small acceleration in the pace of output growth while orders continue to decline, especially for exports. In Germany, while still positive, the production element of the index was less rapid than in April, there was an increase in orders, led by overseas demand rising at the fastest pace since early -2022.
The picture in Asia is largely stable, with Australia’s PMI unchanged from its April level at 51.7, despite a small deceleration in output growth, while India’s reading edged up to 58.3 with a similar but not significant slowing in production. The weakest of the Asian economies with a flash manufacturing PMI is Japan where softer falls in orders and a stronger increase in employment outweighed weaker output to give a modest increase to the overall index to 49.0 (their best since February).
Finally, it is the USA which saw the most significant improvement with their flash manufacturing PMI improving to 52.3 – the highest since February with output returning to growth after falling in March and April. Orders also grew but this was entirely from domestic sources – probably reflecting the impact of the tariff announcements – in contrast to export demand which contracted (again linked to the tariffs).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.