Global manufacturing growth is flat and might be about to slow even further


July was not a good month for global manufacturing activity, continuing June’s weakness.

The JP Morgan-Markit global manufacturing PMI gauge held at 51.0, the equal-lowest level in the past two years.

In PMI surveys, a reading above 50 indicates activity levels are expanding.

Output, up 0.2 points to 51.6, was the only survey component to improve during the month. Worryingly, growth in new domestic orders slowed while new export orders fell to 49.9 from 50.8, indicating a weakening in global demand.

The movements in all the survey components can be found below.

The strongest expansions in production were in the Czech Republic, Netherlands, Italy and Poland. The US also remained close to the top of the global manufacturing output growth league table, seeing its rate of expansion pick up to a three-month high.

On the other side of the ledger, the downturn in Asia continued, with contractions in China, Taiwan, South Korea, Indonesia and Malaysia offsetting solid expansions in Japan and India. Production also fell in Brazil and Russia, they said.

According to Joseph Lupton, senior economist at JP Morgan “the lacklustre trend in new order suggests the soft growth patch may continue in the coming months”.

Essentially, already tepid growth may be about to slow even further based on the survey’s lead indicators.

So how did each nation who reported a PMI reading fare during the month? As Markit noted, the Czech Republic topped the pops at 57.5 – a strong expansion. At the other end of the spectrum, Greece put in a shocker, with its PMI gauge falling to a record-low of just 30.2. If you look hard enough at the chart below you may just be able to see it.

Australia, having seen activity contract sharply in June, recorded the largest month-on-month increase at 6.2 points. Unsurprisingly, Greece recorded the largest decline for the month, losing a whopping 16.7 points.

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