Global Manufacturing Conditions Stagnant in August

Written by Sandy Williams

Global manufacturing conditions were relatively unchanged in August, increasing to 52.6 on the JP Morgan Global Manufacturing PMI from 52.4 in July.

The US continued to show strong domestic and foreign demand. The Eurozone and the UK weakened in August with the Eurozone registering its lowest PMI since July 2013. Japan rebounded while manufacturing conditions were flat in China, South Korea and Turkey.

New orders growth moderated slightly at 53.8 while export orders accelerated modestly, especially as reflected by higher exports to the US and Japan. France, Russia, Poland, South Korea and Indonesia all reported a decrease in new export business.

Input costs rose at the slowest pace in three months while selling prices showed little change. Employment gains were strong in the US, Canada and Ireland and elsewhere with job cuts reported in China, Germany, France, Italy, Greece, Russia, India, Brazil and Indonesia.


The Eurozone Manufacturing PMI came in at 50.7 in August, down from 51.8 in July and below the flash estimate of 50.8. Rates of expansion slowed throughout the region with the exception of Ireland. Economic and geopolitical reasons were cited for slower demand and weaker export business. Input prices increased at slightly lower rate than July while output charges were stagnant. Manufacturing slowdowns in France and Italy were of particular concern. Markit suggests the PMI numbers, and the upcoming PMI for the service industry, may prompt additional monetary or fiscal stimulus.

Output grew for the third consecutive month although at a slower rate in August. The HSBC Russia Manufacturing PMI registered 51.0 in August, unchanged from the previous month. The increase in new orders is attributed to domestic demand as exports continued to decline.

“Overall, Russian manufacturing holds up surprisingly well against various headwinds. In this respect, the import substitution policy that the government has made a priority can provide support to the manufacturing sector in the short-term,”said Alexander Morozov, Chief Economist (Russia and CIS) at HSBC. “However, the overall impact of import substitution on the Russian economy appears to be negative.”

Manufacturing conditions improve only slightly in August as output and new orders both slowed. The HSBC China Manufacturing PMI registered 50.2, down from 50.1 in August.

“The HSBC China Manufacturing PMI eased slightly to 50.2 in the final reading for August from the flash reading of 50.3,”said Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC. “The revisions were mixed, with upward revision to the new export orders and output sub-indices but downward revisions to the employment and input prices indices. Although external demand showed improvement, domestic demand looked more subdued. Overall, the manufacturing sector still expanded in August, but at a slower pace compared to previous months. We think the economy still faces considerable downside risks to growth in the second half of the year, which warrant further policy easing to ensure a steady growth recovery.”

The RBC Canadian Manufacturing PMI registered 54.8 in August up from 54.3. Conditions were reported as robust across the manufacturing sector with gain in production, new business growth, and job creation. “We expect that Canadian manufacturers will continue to directly benefit from the strengthening U.S. economy, which has made and will continue to make positive strides,” said Craig Wright, senior vice-president and chief economist, RBC.

Production and employment picked up in August. Increased production led to higher input buying during the month. Inventory levels increased as firms dealt with transportation delays and lengthening supplier delivery times. The headline PMI rose to 52.1 in August from 51.5 in July supported by export demand.

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