The JP Morgan Global Manufacturing PMI signalled a marginal improvement in global manufacturing conditions in January, rising to 50.1 from the previous month.
This marks the first expansion in seven months, driven by gains in output and new orders. However, regional disparities persisted, with some economies experiencing continued downturns.
Global manufacturing production edged into expansion following a mild contraction in December, underpinned by increased new orders, as revealed in a news release.
India led the growth among major industrial nations, while the United States saw a notable rebound, registering its strongest output growth in seven months.
China also experienced an improved expansion rate. Conversely, manufacturing sectors in the euro area, Japan, and the United Kingdom remained in contraction, though at slower rates for the euro area and the UK.
Sectoral breakdowns revealed divergent trends, with the consumer goods industry recording its strongest growth in seven months due to a solid rise in new orders.
The intermediate goods sector also rebounded into expansion. However, investment goods producers faced ongoing challenges, with both output and new business declining for the eighth consecutive month.
Export demand remained weak, as new export orders contracted for the eighth straight month. Despite this, the rate of decline was the mildest in the current sequence.
The Asia excluding Japan and China region reported its strongest average growth since May 2024, while the contraction pace eased in China, the US, Japan, and the euro area.
The positive trends in production and new orders were not reflected in the labor market, with global employment declining for the sixth consecutive month.
The job cuts matched the highest rate of reduction in the past four-and-a-half years, last seen in October 2024.
While employment increased in the US, Japan, and India, this was insufficient to offset declines in China, the euro area, and the UK, with China’s job losses reaching a nearly five-year high.
Inflationary pressures also intensified, with input cost inflation rising to a five-month high, leading to a steeper increase in manufacturers’ selling prices.
Supply chain conditions remained strained, as supplier performance deteriorated for the eighth consecutive month.
Input buying volumes and inventories of both raw materials and finished goods continued to decline.
Bennett Parrish, Global Economist at JP Morgan, noted the rebound in global manufacturing, stating, “The J.P.Morgan global manufacturing output PMI rebounded back above the neutral 50-mark to 50.6 in January. Solid gains in the new orders and future output PMIs (which rose by 1.3 and 2.6 points respectively) also point to improved growth momentum at the start of the year.”
“Regional disparities remain, however, with solid PMI levels in the US and China contrasting with continued indications of weakness in the euro area and Japan. The improving trend is yet to be reflected in hiring, with the global employment PMI weakening 0.9 points to a four-and-a-half-year low of 48.5 in January,” he noted.
