Global manufacturing activity slipped back into contraction in July, as weak demand, lower exports, and cautious sentiment continued to weigh on production across major regions, according to the latest JP Morgan Global Manufacturing PMI.
Compiled by JP Morgan and S&P Global Market Intelligence in collaboration with the Institute for Supply Management (ISM) and the International Federation of Purchasing and Supply Management (IFPSM), the index declined to 49.7 in July from 50.4 in June. The reading below the 50.0 threshold signals a renewed contraction in global manufacturing activity.
“The JP Morgan global manufacturing output PMI fell back 1.6-point in July, unwinding much of June’s gain,” said Maia Crook, Global Economist at JP Morgan. “At 49.7, the index is consistent with our expectation for global manufacturing to stall in the second half of the year, as industry faces not just a tariff-driven hit to consumption and sentiment but also an unwind of previously front-loaded production.”
Output dropped for the second time in the past three months, with modest declines reported across all three major industry segments: consumer, intermediate, and investment goods.
The downturn was driven in part by falling levels of new business and export orders. New orders declined for the third time in four months, while new export business contracted for the fourth consecutive month.
Asia presented a mixed picture. While India continued to lead global output growth, followed by Vietnam and Thailand, production volumes fell again in mainland China and Japan after slight recoveries in June. Taiwan saw the steepest global decline, followed by Turkey and Poland.
“Forward-looking indicators were similarly downbeat, with the future output PMI falling back to its lowest level since the April Liberation Day-induced drop,” Crook noted. “Underlying July’s output PMI fall were sizable declines in the US and Asia, including China, Japan, Taiwan, and Korea.”
In North America, growth in the United States slowed, while Canada and Mexico experienced ongoing downturns – though at a reduced pace compared to previous months.
Meanwhile, the eurozone posted growth for the fifth straight month, supported by expansions in countries including Ireland, Spain, Greece, the Netherlands, Germany, and Austria.
Manufacturers responded to the subdued outlook with further caution. Employment levels fell for the twelfth straight month, with job cuts noted across key manufacturing economies including the US, China, and the eurozone. However, some resilience was seen in Japan, India, and Brazil, where modest employment gains were recorded.
JP Morgan said the Inventory holdings and purchasing volumes were also reduced, reflecting a conservative approach amid uncertain demand conditions.
On the pricing front, input cost and output price inflation rates were broadly stable, with only marginal easing reported since June. Developed economies continued to face stronger upward price pressures compared to emerging markets.
For further insights, the full report is available on S&P Global Market Intelligence’s website.
