Global manufacturing activity remained in expansion territory in June, although the pace of growth eased for a second consecutive month, according to the latest J.P.Morgan Global Manufacturing PMI.
The J.P.Morgan Global Manufacturing PMI, compiled by J.P.Morgan and S&P Global Market Intelligence in association with ISM and IFPSM, registered 52.2 in June, down from May’s 50-month high of 52.7 and its lowest reading since March.
Despite the decline, the index remained above the 50.0 no-change mark for an 11th consecutive month, signalling continued growth across the manufacturing sector.
J.P.Morgan said manufacturing production expanded for the 11th straight month, with output increasing across the consumer, intermediate and investment goods sectors. Investment goods recorded the strongest growth, while consumer goods saw the weakest expansion.
Growth in manufacturing output was reported across most regions surveyed, including mainland China, the United States, the euro area, Japan and the United Kingdom. Expansion slowed in mainland China and the US but accelerated in the euro area, Japan and the UK.
The report also pointed to signs that the current upturn may be losing momentum. Output and new order growth eased for a second successive month, business optimism fell to its lowest level in eight months and manufacturing employment declined for the third time in four months. New business continued to rise but at its slowest pace since March, with weaker international trade volumes weighing on demand.
According to the report, some manufacturers also indicated that increased customer stockpiling to guard against potential supply disruptions had begun to ease.
Supply chain pressures remained elevated during June, with vendor delivery times lengthening to one of the greatest extents seen in the past four years. However, inflationary pressures continued to moderate, as both input costs and output prices rose at slower rates, reaching three-month lows.
Commenting on the results, Maia Crook, Global Economist at J.P.Morgan, said the manufacturing sector continued to show resilience despite signs of softer momentum.
“The J.P. Morgan global manufacturing output PMI fell back 0.5-point last month, a modest decline that nevertheless leaves the PMI near its highest level in five years. At 53.0, the index suggests continued manufacturing strength through June.”
Crook said forward-looking indicators presented a mixed picture.
“Forward-looking signals are mixed; the new orders index remains elevated near a four-year peak, but another fall in the future output PMI takes it to its lowest level in eight months.”
She added that inflationary pressures had eased alongside lower energy prices.
“On the pricing side, input and output price PMIs both dropped amidst the recent slide in energy prices, but both remain well above their pre-conflict level.”
