Global Economic Analysis and News of Note: Global Manufacturing In “Low Gear”
- At 50.0, the J.P. Morgan global purchasing managers’ index (PMI) was flat from April to May. David Hensley, the bank’s director of global economic coordination, said, “The May PMI data suggest that the global manufacturing sector remains in a low gear. Indices for output, new orders and the headline PMI were all at, or barely above, the stagnation mark. The move up in the finished goods inventory index suggests manufacturers are still working to realign stocks with demand.” The reading was hindered by soft reports out of Asia and South America.
- The Markit PMI for the Eurozone fell to 51.5 in May from 51.7 in April. Readings for the Eurozone two biggest countries, Germany and France, both improved, but new export growth was at a 16-month low. The Markit reading for the United Kingdom, meanwhile, rose to 50.1 in May from 49.4 in April as the rate of new orders improved.
- Asian PMIs remained weak last month. The Caixin index for China fell to 49.2 in May from 49.4 in April as new orders, employment, and output fell. It was the 15th month in a row the index was below the 50.0 mark that indicates contraction in the sector. Nikkei’s reading for Japan also fell, dropping to 47.7 in May, its lowest level in 40 months, from 48.2 in April as output and new orders declined. Taiwan’s index was also down, dropping to 48.5 in May from 49.7 in April. There were a few bright spots and one was Vietnam where, due to an expansion in output and new orders, the PMI rose to 52.7 in May from 52.3 in April. South Korea’s PMI increased to 50.1 in May from 50.0 in April as output and new orders rose slightly. Nikkei’s index for India also eked out a slight gain, to 50.7 from 50.5, but the index also showed the slowest rise in manufacturing production in the current five-month sequence of expansion.
- As a reminder, all PMI readings can be found here.