Global manufacturing PMI stable below neutral mark in April

Global manufacturing PMI stable at 49.6 in April

Over the past week, manufacturing PMIs for a wide range of developed markets (DMs) and emerging markets (EMs) have been published. After having dropped in March for the first time this year, the global manufacturing PMI was stable at 49.6 in April, just below the neutral 50 mark separating expansion from contraction. The aggregate index for EMs (at 50.5 in April, versus 50.7 in March) is still outperforming the equivalent for DMs (April: 48.5, March: 48.4), although the difference has narrowed over the past few months. Amongst DMs, the manufacturing PMI dropped further in April for the eurozone including the Netherlands, while it showed some improvement for the US and Japan. Amongst EMs, Caixin’s index for China (included in the EM aggregate) fell back to below the neutral 50 mark (49.5) for the first time in three months. This is consistent with our view that China’s services sectors are benefiting the most from the reopening rebound, while industrial sectors still face headwinds from a slowdown in global demand and ongoing tech tensions with the US. By contrast, India’s manufacturing PMI rose further in April, to a four-month high of 57.2.

Weakness still dominated by the demand side

Looking at the various subcomponents of the global manufacturing PMI, the weakness in global industry is still dominated by the demand side. The global output component edged up a bit in April, to 50.8 (March: 50.6), with EMs still outperforming. The global component for future output is still at elevated levels (April: 63.0). By contrast, the components covering the demand side remain below the neutral 50 mark. The global new orders component was more or less stable at 49.4 (March: 49.5), while the exports sub-index (at 48.4) was still clearly below the neutral mark, although improving somewhat compared to March (47.7).

Delivery times point to cyclical weakness, while industrial price pressures evaporate

Noteworthy in this respect is also the further drop in delivery times, with this sub-index rising to a post-GFC high of 53.2 (March: 52.6) – a clear illustration of the current cyclical weakness and of the dissipation of global supply bottlenecks. This is particularly true for DMs, with the DM component for delivery times having surged over the past few months, to 56.9 in April. This is also reflected in our global supply bottlenecks index (which includes the DM component for delivery times), which fell deeper into ‘abundant supply’ territory. All of this goes hand in hand with a further fading of industrial price pressures, as the global manufacturing PMI’s sub-indices for input and output prices are coming down sharply towards the neutral 50 mark.