Skip to main content

U.S. Manufacturing Improvement at Odds With Global Weakness

U.S. and global manufacturing are trending in opposite directions.

The J.P.Morgan Global Manufacturing PMI posted a 22-month low in September, declining for the eighth out of nine months this year, while manufacturing in the U.S. rose to a four-month high, according to IHS Markit survey data.

Since the end of last year, manufacturing indexes have slowed in the majority of countries covered by the IHS Markit surveys as a U.S.-led shake-up of international trade policies has rattled global manufacturing confidence.

Declines were broad-based. September’s survey of eurozone manufacturers was the weakest since September 2016. “The slowdown can be linked to sluggish demand and increased risk aversion among customers, often linked to worries about trade wars and tariffs, but also ascribed to rising political uncertainty and higher prices,” said Chris Williamson, economist at IHS Markit.

The biggest decline this year has occurred in the Turkish manufacturing sector as record increases in input costs and selling prices were seen last month. The Turkish PMI has fallen 12.2 points since last December. Germany has also seen a steep drop this year as the manufacturing PMI sank to a 25-month low. The German manufacturing index is down 9.6 points this year. Phil Smith, economist at IHS Markit, said the “escalating US-China trade war, uncertainty surrounding Brexit negotiations and Turkey’s currency crisis have all played a part.”

IHS Markit compiles the results of surveys of factory purchasing managers. The seasonally adjusted data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in that variable from the previous month and below 50.0 a decrease.