The global manufacturing sector is expanding, but at a slower rate, and sits at a 21-month low of 51 in April, according to the latest results from the J.P. Morgan Global Manufacturing Purchase Managers’ Index (PMI).
Joseph Lupton, senior economist at J.P. Morgan, explained that the April PMI shows loss of momentum in global factory output, with slowing in both production and new orders. “Combined with a pickup in the finished goods inventory PMI, the April readings suggest the headwinds to global industry will continue further into this quarter,” he said. “Our forecast looks for goods demand to bounce in the coming months, aiding in the apparent need for some inventory adjustment. Assuming this stronger demand picture is sustained, the weak performance of global manufacturing so far this year should hopefully improve toward mid-year.”
The manufacturing sector in the United States saw a slowdown as well, with its PMI registering at 54.1 in April—falling from 55.7 in March. The growth of production slowed to the weakest it’s been so far this year, but is still strong; while new export business and input prices fell. “The survey results raise worries that the dollar’s appreciation is hurting the economy,” said Chris Williamson, chief economist at Markit. “The slowing in the economy is accompanied by a renewed weakening of price pressures, linked to the exchange rate bringing down the cost of imports.”
The Markit Eurozone Manufacturing PMI did not change significantly this month, registering at 52 in April, down from 52.2 in March. Nations reporting growth included Ireland, Italy, Germany and Spain. France and Greece fell below the neutral mark, at 48 and 46.5, respectively. “Warning lights are flashing particularly brightly over France and Greece, both of which saw accelerating rates of decline at the start of the second quarter,” Williamson added.
Brazil’s manufacturing economy fell to a 43-month low of 46 in April, according to HSBC Brazil PMI. The results indicate that production and new orders dropped sharply and quickly, while inflationary pressures intensified. “The Brazilian manufacturing economy appears to be diving into recession,” commented Pollyanna De Lima, economist at Markit. “Falling domestic and external demand led to further reductions in output during April, while the weak real pushed up input cost inflation by raising the cost of imported raw materials.”
China’s manufacturing PMI remained below the neutral 50 mark as well, falling from 49.6 in March to 48.9 in April. According to the report, total new business, and input and output prices declined at quick rates, while new work from abroad slightly improved. However, in Mexico, the PMI survey remained unchanged at 53.8 and above the neutral mark for the 19th consecutive month. In response to the Mexico Manufacturing PMI, Markit Senior Economist Tim Moore said: “The latest upturn in new work from abroad was the fastest for three years, suggesting that exchange rate depreciation and strong flows of capital investment are delivering an appreciable boost to export sales across the manufacturing sector.”
- Jennifer Lehman, NACM marketing and communications associate