There was a mixed set of results in the Purchasing Managers’ Index (PMI) for manufacturing that was published by J P Morgan using the data from S&P Global. While the global average eased to 52.2, it signalled expansion for the 11th consecutive month.
However, there were some signs that the upturn had passed its peak. At a global level, growth of both output and new orders eased, employment decreased and business optimism fell for the first time in three months. Incoming new business rose for the sixth month in a row, but at the slowest pace since March, with a contraction in international trade volumes acting as a drag on overall intakes of new work. Some firms noted that the recent boost from clients strategic stockpiling (to guard against supply disruptions) had started to wane.
The upturn in UK manufacturing showed signs of losing momentum at the end of the second quarter. Although output growth accelerated as companies continued to benefit from clients’ strategic stockpiling, a softer uplift in incoming new orders suggested the impetus provided by this was already starting to fade. The UK’s Manufacturing PMI was 52.5 in June, down from May’s four-year high of 53.9 and the earlier flash estimate of 53.1. Four of the five PMI sub-components were at levels consistent with improved operating conditions. Output, new orders and employment all expanded and suppliers’ delivery times lengthened. The positive signal suggested by the latter may be slightly misleading, given it was mainly reflective of stretched supply chains as opposed to a substantive increase in demand for inputs. Stocks of purchases fell following a solid rise in the prior survey month.
Manufacturing production expanded for the third month running in June, with the rate of growth improving to a 21-month high. Increased output was often linked to higher new work intakes, better market confidence and promotional activities. The consumer and intermediate goods industries both saw growth of production volumes, in contrast to a downturn in the investment goods category.
In the euro area, the Manufacturing PMI declined slightly to 51.4 in June, although remaining in expansion territory for a fifth consecutive month. Seven of the eight countries covered were in expansion, with Spain the exception, slipping from expansion in May into contraction in June. The opposite was true for France, which returned to expansionary territory in June after slipping into contraction in May. Expansion edged higher in Germany and Greece, but eased in Italy, Ireland, Netherlands and Austria.
Elsewhere in Europe, trends were mixed. Russia returned to expansion in June, following 12 consecutive months in contraction. Czechia, Hungary, Sweden and Switzerland remained in expansion, but Kazakhstan, Türkiye, Poland and Romania remained in contraction.
Across Asia, most countries remained in expansion, although with a slight softening in the case of China, Taiwan, South Korea, India, Pakistan and the ASEAN sub-region.
In the Americas, the US remained in expansionary territory, albeit with some softening. Brazil and Mexico moved from contraction in May into expansion in June, while Canada and Colombia strengthened their expansionary positions.
The strongest reading globally was seen in Sweden (58.3), while the weakest was Poland (46.1). The largest month-on-month improvement was recorded in Colombia (+1.9 points), while the largest decline was in Poland (-3.3 points).
The individual S&P Global PMI reports are available to download on their website at https://www.pmi.spglobal.com/Public/Release/PressReleases and 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).