The flash estimates for the Purchasing Managers’ Index (PMI) for the manufacturing sector point to continued recovery in the UK – which had its strongest reading for 2 years – weakness in Europe and the USA and a mixed picture in Asia.
The flash manufacturing PMI for the UK showed a further improvement with the reading of 51.8 being its highest for 2 years and the 3rd consecutive above the crucial 50 threshold. The output element of the calculation was at its highest for 29 months, mainly due to stronger orders; the latter came from the home market with export orders down, although at the joint weakest pace in 2½ years. However, there was a dampener on the outlook with manufacturers input prices rising at the fastest rate for 18 months as continued disruption around the Red Sea drove transport costs higher. This also contributed to delivery times lengthening for the 7th month running and to the sharpest degree since March. Manufacturing jobs were stable in July, ending a 21-month run of declines.
In contrast, the flash estimate for the Euro-zone edged down to its lowest level since last December, with the output element also at a 7-month low (and for the 16th consecutive month). Manufacturing orders were also down at a faster pace than any other month in 2024, as was employment in the sector. Another factor behind the lower PMI reading was that suppliers’ delivery times shortened for the 6th successive month (in contrast to the UK situation).
The flash estimates from S&P Global are also published for France and Germany and in both cases the Euro-zone trend of a lower overall PMI and output element was repeated. There was also a steeper fall in new orders and a reduction in employment which contributed to the lower overall reading in both countries. The main area of divergence was on input prices where France saw a sharp acceleration in input price inflation at manufacturers while manufacturing purchasing costs continue to fall in Germany.
There continues to be a mixed picture across the three Asian countries that have a flash estimate of the PMI. There was a small improvement in India which is already leading the way globally as both output and orders increased. In contrast, the flash PMI for manufacturing for Japan eased back below the 50 threshold for the first time since April (June having been exactly on this mark) as both output and new orders fell, the latter at the fastest pace since February. Finally in this region, the reading for Australia ticked up but at 47.4, it remans firmly in negative territory – new orders were particularly weak with overseas demand at its lowest level for 4 years (back to the height of the pandemic).
The USA saw its flash estimate of the PMI for the manufacturing sector dip into negative territory for the first time since last December (although the April figure was exactly on the 50.0 mark). Both output and new orders declined, with the latter down particularly sharply but an increase in manufacturing employment provided some relief. There was a marginal lengthening of suppliers’ delivery times which boosted the index, although the report doesn’t give the reason for this.
These reports are available on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.