Global Manufacturing PMI Falls
Global Manufacturing PMI – Weakness in trade growth is expected. The JP Morgan global manufacturing PMI has been declining as you can see in the chart below. The input prices index has been elevated since mid-2017. New orders, headline PMI, and output have been declining since the winter of 2018.
This report gives America a 22.2% weighting which is the highest. Keep in mind Markit has American manufacturing weakening. China is second at 11.9%; Japan is third at 7.6%, and Germany is fourth at 4.9%.
Global PMI fell from 52.8 in July to 52.5. Output increased slightly from 53 to 53.1. Keep in mind, everything above 50 means growth. All the segments were above 50.
New orders were down from 52.6 to 52.4. New exports were flat at 50.3. Employment fell from 51.9 to 51.6. Even though input prices have been running hot, they cooled slightly in August as the index fell from 61.5 to 61.3; output prices also fell as the index went from 54.4 to 54.3.
Finally, the future output index fell from 62 to 61.7. There weren’t any massive changes.
Global Manufacturing PMI – 6 out of 8 indexes fell, signaling the deceleration in global manufacturing continued in August.
Even though August manufacturing PMI hit a 21 month low, global manufacturing growth is near a 3% annualized pace.
PMI has been above 50 for 30 straight months. The only PMI’s which were below 50 were Turkey, Russia, South Korea, Thailand, and Myanmar.
Emerging markets did worse than developed markets. China was at 50.6 which is the lowest PMI in 14 months. Brazil was at a 4 month high and India showed weakness.
This is different from other data I’ve reviewed over the intermediate term as Brazil is still weak and India is one of the strongest economies in the emerging market category.
Global Manufacturing PMI – And the Widening Trade Deficit
The widening trade deficit is bad for potential trade deals because President Trump wants the trade deficit to shrink. He could get tougher on tariffs when he sees higher deficits.
