Global Manufacturing Growth Gains Momentum in May
Sign up for Global Macro Playbook: Stay ahead of the curve on global macro trends.
The global manufacturing sector continued its recovery in May, with output and new orders expanding at a faster pace, according to the latest J.P.Morgan Global Manufacturing PMI released on Monday. The PMI, a composite index tracking manufacturing activity across major economies, rose to a 22-month high of 50.9 in May, remaining above the neutral 50.0 mark for the fourth consecutive month.
"The May global manufacturing output PMI rose 1.2pt to 52.6 in May, its highest level since December 2021," said Bennett Parrish, Global Economist at J.P.Morgan. "At this level, the PMI is consistent with solid 2.5%ar growth in global factory output. Gains in the new orders and employment PMIs also point to an upturn moving ahead."
The report highlights a broad-based recovery, with output growth accelerating in the US, China, and the UK. Rates of contraction eased in Japan and the euro area.
"The base of the revival is broadening, with the survey improving across most of the major economies," Parrish added.
The expansion in manufacturing production was driven by a number of factors, including:
- Stronger new orders: New business rose for the fourth consecutive month, reaching its highest level since March 2022.
- Decreasing backlogs: Levels of outstanding business were reduced for the 23rd consecutive month, albeit at one of the weakest rates during that sequence.
- Improved international trade flows: International trade volumes rose for the second consecutive month in May, with increases seen in the consumer and investment goods sectors.
The recent improvement in manufacturing conditions has also filtered through to the labor market and business confidence. May saw job creation for the second time in the past three months, albeit marginal, with the rate of growth the best since August 2023.
However, price pressures continued to rise in May, with rates of inflation accelerating for both input costs and output charges. For both price measures, rates of increase were steeper in developed nations compared to emerging markets.
The report suggests that the global manufacturing sector is on a path to recovery, with strong new orders, improved trade flows, and a tentative return to job creation fueling growth.