Factory output fell in June, after having risen in the past four months due to easing supply chain restrictions and the lifting of restrictions in mainland China. The main factor leading to lower production was the continued decline in new orders, which fell for the twelfth consecutive month.
The global manufacturing PMI for June fell to a 6-month low of 48.8, marking the 10th month of worsening operating conditions. New orders and exports continued to fall, hitting production levels. However, the supplier’s delivery time is shortened and input costs are reduced, helping to reduce it somewhat. International trade flows remain weak, due to new export business.
Only 10 of the 29 countries with June data saw an increase in output, 7 of which were in Asia (including growth in India and mainland China). Industry data showed output declines in the intermediate goods and investment sectors and stagnation in consumer goods producers, according to the report.
International trade flows remained particularly weak, as new export business contracted for the sixteenth consecutive month. The fastest rate of decline in six months, with declines signaled in the US, euro area, Japan, South Korea and Brazil (among others), while mainland China increased only marginally .
The current persistent weakness of the demand environment leads to an increasingly cautious approach from manufacturers. Staffing levels were generally flat in June, purchasing activity was cut to the largest extent since January, and inventories dried up as companies released capital. The tight demand also led to a twelfth straight month of job backlogs.
Business optimism was less optimistic in June. While manufacturers (on average) still expect output to increase next year, overall optimism has fallen to its lowest level since last November. Confidence is at a 6-month low in the US, an 8-month low in mainland China and a 7-month low in the euro area (with France and Germany forecasting output declines over the next 12 months). ). Japan is one of the rare exceptions that has seen sentiment solidify.
There was better news on supply and prices in June. Suppliers’ average delivery times shortened for the fifth consecutive month, though to the least marked extent since February. Input costs fell for the second month in a row, at a faster rate (on average) in developed countries than their emerging market counterparts. The average selling price also continuously decreased in May and June.
Fiber2Fashion (DP) News Desk
