The Global Purchasing Managers Index (PMI) for manufacturing slipped again in August as output was negative (although only marginally) for the first time this year, with a downturn in output for both the investment and intermediate goods sub-sectors; orders were also lower. Some countries bucked this trend, including the UK where the PMI improved to its highest level since June 2022 thanks to output and new orders growing.
The Global PMI for manufacturing, produced by S&P Global and sponsored by J P Morgan, slipped to 49.5 in August for a second successive negative reading and the lowest this year. Unlike July (49.7 overall), output fell in August to add to the decline in orders that was driven by an acceleration in the contraction of export orders in many countries. Manufacturing employment also decreased in August, albeit only marginally, and the investment goods sub-sector bucked this trend and saw staff numbers increase.
However, the UK bucked this trend and recorded another improvement in its already positive manufacturing PMI to 52.5 – this is the highest level for 26 months and it has now been above the crucial 50 threshold for 4 months in a row. Output, new orders and employment in the manufacturing sector were all positive in August but the stocks of purchases (inputs) fell for the 23rd consecutive month. Despite the overall increase in orders, export demand fell for the 31st month in a row in the face of a slowdown in Europe and China, freight delays and high shipping costs. The latter two factors were also behind a further lengthening of suppliers’ delivery times which, perversely, adds to the positive PMI reading, although not by enough to change the overall trend.
This is in sharp contrast to the Euro-zone where the manufacturing PMI was at 45.8 for the 3rd consecutive month. While Germany (42.4 and the lowest in this report) and France (43.9) are particularly weak with a 5 and 7 month lows respectively, only Greece (52.9), Spain (50.5) and Ireland (50.4) are in positive territory; Italy also saw a significant improvement compared to July but at 49.4 it remains below the threshold.
For the Euro-zone overall, output remained firmly in contraction, although that element of the calculation did edge up marginally compared to July. However, total new orders fell at the sharpest rate this year and employment was also down.
Among the other European Union countries that have a PMI survey, despite an improvement in their reading, Czechia (46.7), Poland (47.8) and Romania (48.4) remain below the crucial 50 level, as is Hungary (47.6) although in their case, this was lower than the July manufacturing PMI. The exception to this trend was Sweden which saw a substantial turnaround from the negative reading in July to record 52.7 in August.
Elsewhere in Europe, despite having the strongest improvement in our analysis in their PMI compared to July (up by 5.5 points), Switzerland remained in negative territory at 49.0; Turkiye (47.8) had a more modest rise in their PMI and Kazakhstan (53.3) extended its already positive reading.
The trends in Asia are mixed; India (57.5 – the strongest manufacturing PMI again this month), Taiwan (51.5) and the ASEAN group (51.1) all had lower readings than in July but managed to remain in positive territory. The other countries in this region all had higher readings than in July but Japan (49.8) and Australia (48.5) remined below the threshold despite this improvement; the rise for China (50.4) took them back above 50 following a marginal dip in July and South Korea (51.9) extended its already positive reading.
In the Americas, only Canada (49.5) managed to improve on its July position but did not get into positive territory. Mexico (48.5) and the USA (47.9) saw their already negative readings weaken further and it also edged down in Columbia (49.8) which had been exactly on the threshold level of 50 in July. Finally, although Brazil (50.4) had the largest drop in its manufacturing PMI compared to July in this report (down by 3.6 points), it just managed to extend the run of positive readings to 8 months.
Overall, of the 28 countries and 2 regions that we report on each month, 12 were above the 50 threshold that marks the division between contraction and expansion of activity in the manufacturing sector.
The manufacturing PMI is a weighted composite index of new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).
The individual S&P Global PMI reports are available to download on their website 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).