Activity levels across the global manufacturing sector expanded at the slowest pace in nearly three years in the first quarter of 2016.
The latest JP Morgan-Markit global manufacturing purchasing managers index (PMI) rose 0.5 points to 50.5 last month, suggesting that activity levels expanded fractionally in March after stagnating in February.
Despite the small acceleration, the average reading for the quarter slid to 50.4, indicating the weakest expansion seen since the June quarter of 2013.
PMI’s measure change in activity levels from one month to the next, with a reading of 50 indicating activity levels neither grew nor deteriorated from one month earlier.
“PMI data signalled that conditions in the global manufacturing sector remained subdued,” said Markit following the release of the March report. “Although the headline index and those tracking output and new orders all edged higher, their respective levels were indicative of only mild growth at best.”
“The trend in international trade flows deteriorated further, as highlighted by a second successive monthly decrease in new export orders.”
The table below, supplied by Markit, reveals the movements in the surveys subindices in March. Like the headline index, a 50 reading indicates no change in activity levels from one month earlier.
Indicative of the subdued headline index, Markit notes that “conditions remained lacklustre in the three main industrial regions covered by the survey”.
“Manufacturing production was near-stagnant in Asia,” said Markit, adding those in the Americas “fared slightly better”. Europe was yet again the star performer, with “almost all of the eurozone nations reporting higher output in March”.
Despite the quarterly performance, Joseph Lupton, senior Economist at JP Morgan, suggests the acceleration in new orders — a lead indicator on future activity levels — points to further improvement in the months ahead.
“The March PMI data hints at a modest improvement in global industry, arresting the downward trend in place since late last year,” says Lupton.
“Encouragingly, the new orders component also picked up, while a more modest rise in the finished goods inventory index keeps the pace of stockbuilding relatively low. On balance, the March PMI’s remained relative soft but the upward move points to improvements heading into 2Q16.”
JP Morgan-Markit PMI survey captures responses from over 10,000 purchasing managers across 30 individual nations. Markit estimates that countries surveyed account for an estimated 89% of global manufacturing output.