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China, India, and Europe Improve, But U.S. and Overall Global Manufacturing Still Struggle for Growth

Posted By Paul Tate, April 05, 2016 at 12:55 PM, in Category: Manufacturing Leadership Community

9fcb342d882471beeac009697de55cb2_f1621.jpgThe latest global manufacturing growth figures for March show only a modest improvement in industrial performance for many countries around the world, according to researchers Markit Economics.

The Global Manufacturing Purchasing Managers’ Index, created in conjunction with bankers J.P. Morgan, rose to just 50.5 last month, up marginally from its stagnant 50.0 level in February. (A PMI of 50 marks the threshold between growth and contraction).

In the U.S., manufacturing sector growth remained almost unchanged from its recent 28-month low with a PMI of 51.5 for March, up only slightly from 51.3 in February, although a faster increase in incoming new work and sustained growth of employment numbers were the main positive developments last month.

“March’s survey highlights sustained weakness across the US manufacturing sector, meaning that overall growth through the first quarter slowed to its lowest since late-2012,” commented Tim Moore, senior economist at Markit. “Subdued client spending patterns within the energy sector, ongoing pressure from the strong dollar, and general uncertainty about the business outlook were cited as factors weighing on new order flows in March. “

To the North, Canada had a better time, moving out of contraction after the last 8-months to 51.5, its highest level since December 2014. To the South, Mexico also saw strong growth with a PMI up to 53.2, the highest level since May 2015. Business conditions in Brazil, however, continued to be a challenge with a PMI of just 46.0, although contraction seems to be slowing down following its uncomfortable 44.5 level in February. 

In Asia, China’s increase in industrial activity clicked up in March with a PMI rising to 49.7, up from 48.0 the previous month, suggesting that recent government stimulus policies may be slowly beginning to take effect. China’s manufacturing PMI, however, still remains below the growth threshold of 50 points where it’s been languishing for the last 13 months.

India saw the strongest surge in industrial activity in Asia in March, with a PMI at an 8-month high of 52.4. “The Manufacturing PMI ticked higher in March,” noted Markit economist Pollyanna De Lima, “providing welcome reassurance that the sector has moved farther away from the flood-related contraction seen in December.”

“We should expect another quarter of robust economic growth in the last quarter of the 2015-16 financial year,” she added. 

Improvements were also seen in Taiwan (up to 51.1), Indonesia (up to 50.6), Singapore (up to 52.0), and Vietnam (up to 50.7). However, manufacturing in Japan dipped into contraction last month with a PMI of 49.1, and both South Korea at 49.5, and Malaysia at 48.4 remained under the growth threshold, offsetting many of the other regional gains.

Moving West, Turkey’s manufacturing activity dipped below the growth threshold with a PMI of 48.8, while Russia’s industrial performance continued to suffer with worsening contraction last month, down to 48.3 in March compared to 49.3 in February.

Europe, however, fared better with mixed fortunes and a Eurozone PMI of 51.6 last month. This, however, is only a marginal increase from its 51.2 level in February. Nevertheless, Ireland saw an 8-month high at 54.9, the Netherlands reached a 5-month high at 53.6, and both Italy (53.5) and Spain (53.4) recorded 3-month highs. France, however, dipped back into contraction with a 7-month low of 49.6 and Greece remained below the growth threshold at 49.0.

Outside the 18-nation Eurozone, The UK’s performance was also subdued last month, with a PMI up to just 51.0, following its 34-month low of only 50.8 in February.

Overall, these mixed results around the world left the Global Manufacturing PMI up only slightly over February at 50.5, and still hovering too close for comfort around the stagnation level of 50 points.

“Further gains needs to be seen to get global industry back on track after what has been a long stretch of soft growth”, commented Joseph Lupton, Senior Economist at J.P. Morgan.

The good news is that Lupton remains cautiously optimistic about the rest of the year. “On balance, the March PMI’s remained relative soft but the upward move points to improvements heading into 2Q16,” he added.

Manufacturing industry leaders everywhere will be hoping he’s right. 


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Written by Paul Tate

Paul Tate is Research Director and Executive Editor with Frost & Sullivan's Manufacturing Leadership Council. He also directs the Manufacturing Leadership Council's Board of Governors, the Council's annual Critical Issues Agenda, and the Manufacturing Leadership Research Panel. Follow us on Twitter: @MfgExecutive



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