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PURCHASING MANAGERS INDEX FOR MANUFACTURING

The Global Purchasing Managers’ Index (PMI) for manufacturing produced by J P Morgan using the data from IHS Markit eased down to 55.5 in the latest iteration of this survey.  As we will see in our travels around the world, Europe has the strongest PMI readings with the top 7 countries all in this region before you get to the USA in 8th place.

However, we will start with the UK where, although the PMI fell slightly to 63.9 (May was an all-time record of 65.6), this still points to an exceptionally positive trend for the sector, notwithstanding the distortion to the PMI from lengthening delivery times.  Output was positive across the three parts of manufacturing - consumer, intermediate and investment goods - supported by strong intakes of new orders which were close to May’s record levels.

The Euro-zone saw the overall index rise slightly to a new record high of 63.4 (the 4th consecutive month this has happened);  like the UK, this is spread across all of the sub-sectors.  At the country level we see some variation with Austria, Germany, Greece and Spain all having a higher reading than in May while France, Ireland, Italy and the Netherlands were slightly lower;  however, only France and Greece have a PMI reading just below 60 (note nowhere near the crucial level of 50), so all of the countries are still seeing a strong expansion in activity in their manufacturing sector.

In the other European countries, the story changes slightly;  Czechia and Poland saw an improvement on already strong figures from May and Hungary also improved its good but more modest PMI reading.  The other country with a higher PMI than in May was Turkey which moved back above 50 as the Covid-lockdown was relaxed.  However, in contrast, Russia saw its manufacturing PMI reading fall below 50 for the first time this year driven by a fall in orders and employment.  Finally in this region, both Sweden and Switzerland had a lower PMI than in May but they remain at very high positive levels.

It is in Asia that we see the weakest figures, with only South Korea seeing an improvement (just) on the May readings.  While Taiwan had the largest fall in the PMI across the countries/regions that we track, the level still points to significant expansion in activity but the falls in both India and the ASEAN trading block took them below the crucial 50 level, implying a contraction in the manufacturing sector.  Japan and China also saw a modest easing of their manufacturing PMI figure but remain in positive territory.

In the Americas, the USA remained at the high level we saw in May and there were improvements in the PMI reading for Brazil (they had the biggest improvement compared to the May level in our analysis) and Mexico;  however, in the case of the latter, the PMI reading was still in negative territory.  Data for Canada is not yet available for June due to public holidays.

We have already mentioned the biggest movers in the June figures (Brazil up and Taiwan down) - this means that the strongest manufacturing PMI reading was in the Netherlands (68.8), while the weakest was in India (48.1) with the ASEAN region, Russia and Mexico also in negative territory.

The IHS Markit PMI reports for major economies around the world are available from their web-site at https://www.markiteconomics.com/Public/Release/PressReleases and our summary charts report is available to download below.

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