Global PMI: Input costs rise to a 16-month high

Take heed, folks; input costs, as measured in the latest release of the Global Manufacturing PMI, are rising at the fastest clip in 16 months. Manufacturing input costs were a leading indicator of the last wave of inflation.  

Measured overall, worldwide manufacturing input costs rose at the steepest rate for 16 months in June. These rising costs pushed up factory gate selling prices, which rose at the sharpest pace since March 2023. Rates of increase in both price measures remained stronger (on average) in developed nations compared to emerging markets. – JPMO Global Manufacturing PMI

Summary

The latest Global Manufacturing PMI report, produced by J.P. Morgan and S&P Global, indicates a continuation of the upturn in global manufacturing, although input cost inflation has accelerated to a 16-month high. Key highlights:

1. PMI Overview: The Global Manufacturing PMI came in at 50.9 in June, slightly down from May’s 51.0 but staying above the neutral 50.0 mark for the fifth consecutive month, indicating ongoing improvement in operating conditions.

2. Sub-indices Performance: Four of the five sub-indices showed expansion:

   • Output: The growth rate held near May’s two-and-a-half-year high.
   • New Orders: Increased for the fifth month, albeit at a slower rate.
   • Employment: Rose for the third time in four months.
   • Suppliers’ Delivery Times: Lengthened.

3. Regional Insights:

   • Asia: Showed robust performance with significant growth in countries like India, Vietnam, and Thailand.
   • Euro Area: Continued weakness with output falling for the fifteenth consecutive month, particularly in Germany, France, and Italy.
   • US, UK, and Brazil: Sustained growth into June.

4. New Export Orders: Fell for the first time in three months, indicating a deterioration in international trade flows.

5. Business Optimism: Dipped to an eight-month low due to subdued market conditions.

6. Inflationary Pressures:

   • Input Costs: Rose at the steepest rate in 16 months.
   • Output Prices: Increased at the fastest pace since March 2023, with stronger rates of increase observed in developed nations compared to emerging markets.

7. Supply Chain Conditions: Remained relatively stable, with only marginal lengthening in vendor lead times despite global shipping disruptions.

The report reflects a mixed global manufacturing landscape with pockets of growth amidst inflationary pressures and supply chain challenges.