PMI Indicates Global Downturn for Manufacturing

The global manufacturing sector downturn continued to worsen in August. The J.P.Morgan Global Manufacturing PMI posted a 49.5 for its fourth month of contraction. More than half of the nations surveyed by J.P.Morgan and IHS Markit had PMI readings below the neutral 50 mark last month, with Germany and the Czech Republic declining at the steepest rates. China and the U.S. showed growth, albeit weak, with PMIs of 50.4 and 50.3, respectively.

“While the global manufacturing output PMI increased in August, its level remained low signaling very modest growth in manufacturing output,” commented Olya Borichevska, from Global Economic Research at J.P.Morgan,  “Away from the output index, detail of the PMI report points to weakening in activity. New order intakes fell at the joint-fastest pace in nearly seven years, business optimism dropped to a series record low, international trade flows weakened and the cyclically sensitive orders-to-inventory ratio hit its joint-lowest level since late 2012. Geopolitical uncertainty weighing on business capital investment remains the main drag on global industry. Developments on this front need to improve for industry to lift.”