The global manufacturing sector showed further signs of weakness in August, with declines in production, new orders, and employment.
According to the latest JP Morgan Global Manufacturing PMI, the composite index fell to an eight-month low of 49.5, marking its second consecutive month below the neutral 50.0 threshold.
Bennett Parrish, global economist at JP Morgan, highlighted the downturn, stating, “The JP Morgan global manufacturing output PMI slipped 0.3 points to 49.9 in August, its first reading below the 50-mark this year.”
“In addition to weaker output growth, survey details suggested a continued slowdown in new order intakes and the pace of hiring.”
The survey, produced by JP Morgan and S&P Global Market Intelligence in association with ISM and IFPSM, indicated that out of 31 countries surveyed, 18 reported PMI readings consistent with a deterioration in manufacturing conditions.
The downturns were particularly notable in the United States, the euro area, and Japan. Although China’s PMI moved slightly above the no-change mark to 50.4, it remained at a subdued level.
In contrast, India showed solid growth and was the best performer among the surveyed nations, along with the UK and South Korea.
“Although the Euro area remained the weakest performing region, output growth slowed again in the US and a few other EM Asian economies according to the August surveys,” Parrish added.
Global manufacturing production decreased slightly in August, marking the first contraction in 2024.
This decline was driven by reduced output in both intermediate and investment goods industries.
While consumer goods producers continued to see growth, it was the weakest in the current 13-month sequence of expansion.
New orders received by global manufacturers also contracted for the second consecutive month in August.
All three sub-industries covered by the survey—consumer, intermediate, and investment goods—reported decreases in new order intakes.
The global trade environment remained particularly challenging, with the volume of new export business falling for the third straight month and at the fastest pace since December of the previous year.
Major exporters such as China, the US, Japan, Germany, and the UK registered notable reductions in new export orders.
Parrish noted the impact on pricing, saying, “The pricing PMIs firmed in August, likely reflecting the ongoing inflationary impact of higher shipping costs.”
Manufacturing employment also decreased in August, marking the first decline in six months. However, the rate of job losses was marginal, as reductions in the consumer and intermediate goods sectors were partially offset by increased staffing in the investment goods category.
Employment reductions were observed in the US and the euro area, while China saw no change. On the other hand, job creation was reported in Japan, the UK, and Brazil.
The outlook for the global manufacturing sector remained cautious in August. Business optimism was below its long-run survey average and among the weakest levels in the past 18 months.
The ratio of new orders to finished goods inventory remained unchanged from July’s nine-month low, reflecting manufacturers’ conservative approach.
