Global Manufacturing PMI slips further amid new order intakes decline, says JP Morgan

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Conditions in the global manufacturing industry have seen a decline in June as output shrinks to contraction, dragged by a decrease in new order intakes, according to the latest global manufacturing PMI report.  

The JP Morgan Global Manufacturing PMI slipped further into contraction territory from May’s 49.6 to 48.8 in June. This marks a six-month low and signals worsening operating conditions in the industry for 10 consecutive months. 

Manufacturers were forced to move cautiously in June amid the decline in new order intakes, leading to sharp purchasing cutbacks, inventory destocking, and broadly unchanged staffing levels.

Global business optimism also slipped to a seven-month low. The United States saw a six-month low in manufacturers’ business confidence, while China reaches an eight-month low.

A seven-month low was recorded in the euro area, with France and Germany forecasting output to fall over the next 12 months. 

Meanwhile, Japan was one of the rare exceptions as it recorded stronger sentiments in business optimism at the end of the second half of 2023. 

Factory output declined in June after an easing in the past four months following improvement in supply chain constraints and the lifting of restrictions in mainland China. 

Only 10 out of 29 nations for which the June data were available saw an increase in production— seven of which were located in Asia. 

International trade also remained weak as new export business declined for 16 consecutive months. 

The rate of decline accelerated to the strongest in six months, with reductions signalled in the US, euro area, Japan, South Korea and Brazil. China saw only saw a moderate increase. 

Meanwhile, supply and price indices saw improvements in June as the average vendor lead times shortened for the fifth month running, albeit to the least marked extent since February. 

Input costs fell for the second straight month, with a steeper rate of decline in developed nations compared to their emerging market counterparts. Average selling prices posted decreases in both May and June. 

The JP Morgan Global Manufacturing PMI is a composite index produced by J.P. Morgan and S&P Global in association with ISM and IFPSM.