The Global Purchasing Managers’ Index (PMI) for manufacturing, produced by J P Morgan using the data from S&P Global, slipped back in March but, at 50.3, it remains just above the crucial threshold. In a mix of trends around the world, the UK had the 2nd largest decline in this measure and the lowest overall level.
At the global level, the lower reading was largely due to slower growth (but still positive) in both output and new orders, while employment and stocks of finished goods fell marginally. In addition, suppliers delivery times added a slightly stronger positive contribution but this has given a false indication recently from issues such as shipping delays. However, we must note that although output increased for consumer and intermediate goods sub-sectors, it fell for the ninth time in the past ten months for investment goods (the most important group for us).
As noted above, the UK had one of the largest falls (behind only the USA) compared to the February report, although it was slightly above the flash estimate that we published last week; however, this still left us with the lowest manufacturing sector PMI reading in this analysis at 44.9. Output fell for the 5th month in a row and at the fastest pace since October 2023, with all of the sub-sectors seeing significant contractions. The fall in orders was the joint most rapid (with August 2023) since the pandemic in the face of rising geopolitical tensions, weak client confidence and economic slowdown in both domestic and overseas markets.
As we hinted at last week when we covered the flash figures, the manufacturing PMI for the Euro-zone showed an improvement compared to February, although only to 48.6. The detailed breakdown for the 8 countries included in this aggregate reveals that this was largely concentrated in Germany and France, with the latter having the largest month-on-month improvement in their PMI (+2.7 points), although this was not enough to move either of them back into positive territory overall. The other large manufacturing economies in this region – Italy, Spain and the Netherlands – all saw a lower (and sub-50) reading in March. Across the region, output actually increased for the first time in two years (again, mainly due to Germany, with help from Ireland, the Netherlands and Spain) but new orders continued to contract, albeit at the slowest pace in the almost 3 year run of decline in this factor.
The other 5 EU countries who have a PMI survey had a mixed picture; Romania, which was already in negative territory was the only one where the reading weakened and Czechia saw a modest improvement but this was not enough to take them above the 50 threshold. The other 3 countries – Hungary, Poland and Sweden – which were above the 50 mark in February, were broadly unchanged from that level in March.
Elsewhere in Europe, both Switzerland and Turkiye saw a deterioration of their already negative positions, while Kazakhstan which has been positive since March 2024 saw a modest improvement to reach their highest level since last November.
There is a mix of trends and levels in Asia where India (58.1) extended its position as the country with the highest manufacturing PMI in this report and Australia also had a notable improvement in its already positive reading – this position was shared by China which had a more modest increase compared to February. In the opposite direction, a significant decline for Taiwan took them back into negative territory for the first time since last September, while Japan and South Korea saw more modest falls to their already sub-threshold manufacturing PMI. These were of a similar magnitude to the reduction for the ASEAN region, although here the reading was still above 50.
We have already noted that the USA had the largest month-on-month fall in their manufacturing PMI, although it did manage to remain just above 50; Brazil was in a similar position, albeit with a smaller fall in their reading. The most notable trends were for Canada and Mexico – perhaps not surprisingly given that they have been the main target for US tariffs up to this week – which saw their already negative readings fall further.
Overall, across our 29 countries and 2 regions (not counting the global aggregate), only 13 were above the 50 threshold indicating an expansion in activity in their manufacturing sector with the other 18 in negative territory.
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. You should 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).