The global manufacturing sector showed signs of strain in March following the outbreak of war in the Middle East, according to the latest JP Morgan Global Manufacturing PMI.
The index registered 51.3 in March, down from February’s 44-month high of 51.8, but still indicating growth for the eighth consecutive month.
The report, produced by J.P. Morgan and S&P Global Market Intelligence in association with ISM and IFPSM, revealed that while manufacturing conditions remained positive overall, several concerning trends emerged.
Growth in both production and new orders slowed, while input costs surged to their highest level since July 2022. Supply chains became increasingly stretched, with suppliers’ delivery times extending to their worst level in almost three-and-a-half years.
Global production growth eased to a three-month low across consumer, intermediate, and investment goods sub-sectors.
Among the 33 nations surveyed, 12 countries experienced outright contractions in production volumes, including Australia, Brazil, Canada and the UK. Meanwhile, Kazakhstan, Romania, Mexico, Russia, and Turkey all saw steep downturns.
When compared to February’s results in output, the worst performers include Indonesia, Vietnam, India, and the Philippines.
The four largest industrial regions maintained growth despite global headwinds. The United States and eurozone actually saw a slight acceleration in production, while mainland China and Japan experienced slower growth compared to February’s stronger performance.
Manufacturing-specific data is not available for the Middle East and North Africa region, as those nations are covered by ‘non-oil’ PMI surveys.
Business confidence regarding the year-ahead outlook fell to a five-month low, reflecting concerns about rising cost pressures and supply chain disruptions.
International trade volumes nearly stagnated, while employment levels varied by region, with job cuts in the eurozone and UK offset by increased staffing in China, Japan, and India.
Maia Crook, Global Economist at J.P.Morgan, attributed the weakening performance to “geopolitical uncertainty and higher commodity prices.”
“The output PMI dropped 1.7- point to 51.4, remaining in positive territory but fully unwinding an early-year gain. Business sentiment (as measured by the future output PMI) took a similarly large step down, falling to a five-month low. Mirroring the declines in activity were jumps in the price indexes (both input and output) and supplier delivery times, a clear sign of both surging cost pressures and substantial supply chain disruptions,” Crook noted.
