The Strategist

Study: Two thirds of world countries cut manufacturing activity

07/05/2023 - 03:03

Data from purchasing managers' indices (PMIs), one of the most important worldwide industry indicators, suggest to a further deterioration of global industrial demand.
According to data from J. P. Morgan and S&P Global, only ten of the 29 nations included in the calculation of the average showed a rise in industrial activity in June, bringing the global manufacturing PMI to a six-month low of 48.8 points from 49.6 points in May.

The index dropped due to declining new orders and weaker demand, notably for exports. Consequently, there was less growth in China and less foreign demand in the US, the Eurozone, Japan, South Korea, and Brazil. As a result, manufacturers cut back on purchasing as well (to the lowest level since January), inventories also decreased, and so did order fulfillment delays. The cost of raw materials and components has been declining for the second consecutive month, with industrialized countries experiencing this trend more so than emerging ones. May and June saw a decrease in average finished goods prices as well.

The PMIs for the euro zone dropped precipitously to 43.4 points, a 37-month low, from 44.8 points in May, representing their lowest level of activity. Price decreases for components and raw materials were the steepest since July 2009. Activity in the USA is declining as well, with a reading of 46.3 points in June compared to 48.4 points in May. Although it continued to be in the growth zone, China's Caixin indicator also slowed down: 50.5 points in June compared to 50.9 in May.