June 10, 2019

Global Manufacturing Sector Softens In May


  • The JP Morgan global purchasing managers’ index (PMI) in May fell below the 50-point mark that indicates a contraction in the sector. The bank said business conditions deteriorated to the greatest extent in over six-and-a-half years and production volumes stagnated and new orders declined at the fastest pace since October 2012.
  • The IHS Markit PMI for the United Kingdom fell to 49.4, down sharply from 53.1 in April. Manufacturers reported increased difficulties in convincing clients to commit to new contracts during May and this was reflected in the already high level of inventories following recent stockpiling activity in advance of the original Brexit date. The total volume of new business placed also fell for the first time in seven months. The IHS Markit PMI for the Eurozone also fell, declining to 47.7 in May from 47.9 in April. Weakness remained centered on the intermediate and investment goods sectors, the report said.
  • Readings in Asia were mixed last month. The Caixin PMI for China registered 50.2 in May, unchanged from the previous month, signaling further marginal improvement in the health of China’s manufacturing sector. Underpinning the positive reading was a further rise in total new orders placed with Chinese goods producers. The rate of new business growth quickened slightly since April, supported by a renewed increase in new export sales. The reading for India also improved while Japan’s index fell as output expectations turned negative for first time since November 2012. South Korea’s reading also fell below the all-important 50 mark that separates expansion from contraction. The Nikkei’s index for ASEAN countries – Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – rose slightly, to 50.6 from 50.4.
  • As a reminder, all PMI readings can be found here.