Theme of the Day: Global manufacturing production rises at joint quickest pace since Jun 2024

Global manufacturing business conditions improved at a modest but faster pace in Jan, with an encouraging increase in the numbers of economies reporting higher production. Total worldwide output growth was the joint sharpest since Jun 2024. The J.P. Morgan Global Manufacturing PMI index rose to a three-month high of 50.9 in Jan, from 50.4 in Dec, to remain above the neutral mark of 50.0 for the sixth month running. Manufacturing output rose at the joint-quickest pace since Jun 2024, underpinned by the strongest rise in new work for almost a year (although rates of expansion were mild in both cases). There were signs of international trade flows stabilising, as new export orders fell only slightly and to the joint-weakest extent during the current ten-month downturn. Looking deeper into output trends, strong growth was seen in India, the US and the ASEAN economies, the latter led by Vietnam. While the Indian expansion followed a general pattern of robust growth in recent years, US growth was the joint-best since Apr 2022 and the overall ASEAN increase was the joint-fastest since Apr 2023. Output growth hit 45- and 11-month highs in Japan and Taiwan respectively, while South Korea’s upturn was the joint strongest in 17 months. A modest sustained upturn was also seen in mainland China. In Europe, the UK’s expansion was the fastest in 16 months and the eurozone returned to growth. Areas of weakness persisted, however, including a sharp downturn in Brazil. Data broken down by sub-sector definitions saw expansions across the consumer, intermediate and investment goods industries, with the fastest growth in the consumer goods category. Two sectors also saw new orders rise (consumer and intermediate goods). Manufacturing optimism has recently shown resilience in the face of heightened geopolitical uncertainty. Business confidence reached a ten-month high, although the level of optimism stayed below its long run average. Below par confidence (as measured against national historical standards) was evident in the US, mainland China, India, Japan and across ASEAN. More encouraging was above par sentiment in Europe. Manufacturing employment rose for the first time in three months in Jan, albeit marginally, as increases in the intermediate and investment goods sectors offset cuts in the consumer goods category. Mainland China, the US and Japan were among the nations reporting higher employment, in contrast to job losses (on average) in the euro area. Input costs and selling prices both rose at the quickest rates for around three years in Jan, hitting 36- and 35-month highs respectively. Average vendor performance deteriorated for the twentieth successive month, in part reflecting increased input purchasing among manufacturers.