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May’s Global Manufacturing Slump Wasn’t as Bad as April

The global manufacturing downturn remained substantial during May, as the COVID-19 pandemic continued to disrupt industry and its supply chains, IHS Markit reported Monday.

Although rates of declines in output, new orders and employment all eased somewhat, they were still among the steepest registered during the 22-year history of the J.P. Morgan Global Manufacturing Purchasing Manager’s Index (PMI), a composite index produced by J.P. Morgan and IHS Markit.

Global manufacturing production fell for the fourth straight month in May, with substantial decreases across the consumer, intermediate and investment goods sub-industries. Of the 28 nations for which May data was available, all except China—where growth was the highest since January 2011—saw manufacturing output contract.

United States

Last month saw a slightly softer, but still severe, contraction in U.S. manufacturing output. The decrease was largely driven by weakening customer demand and lower new-order inflows from domestic and foreign customers.

A marked decline in total sales and a negative outlook for production over the coming year drove employment down, as firms reduced workforce numbers substantially. At the same time, lower raw material purchasing and weaker overall demand conditions put pressure on suppliers to lower their prices. This led to input costs falling again, helping manufacturers to cut their output charges at a record pace as firms sought to remain competitive.

“With increasing numbers of companies restarting production, we should see some improvements in the output trend in coming months, and it was reassuring to see signs of the downturn already starting to ease in May, suggesting April was the eye of the storm as far as the production collapse is concerned,” Chris Williamson, chief business economist at IHS Markit, said. “There remains a high risk that any recovery will be frustratingly slow, as ongoing social distancing measures, high unemployment, job insecurity and damaged balance sheets constrain consumer and business spending. The recovery will of course also fade quickly if virus infections start to rise again.”

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The easing of restrictions related to the coronavirus pandemic led to a stronger rise in Chinese manufacturing output in May, with the rate of expansion the quickest in more than nine years. However, demand conditions remained subdued, largely due to a notable fall in export orders, the survey said.

As a result, firms continued to trim their staffs and raised their buying activity only slightly. However, the rate of job shedding was the slowest for four months. A lack of new work also led to the first reduction in backlogs of orders since February 2016.

On a positive note, supplier performance was broadly stable in May after travel restrictions and low supply levels hindered vendor performance in prior months. May data also signaled a further increase in output following February’s record decline, with firms widely citing the resumption of work.

“Supply was generally stronger than demand in the manufacturing sector, as production continued its expansion amid a broader economic rebound, while demand had yet to recover,” Dr. Wang Zhe, senior economist at Caixin Insight Group, said. “Economic activity gradually came closer to normal, with more businesses resuming operations as the domestic coronavirus epidemic was largely brought under control…New export orders continued to drop sharply, pointing to a contraction in foreign demand amid the pandemic…A production expansion led to a further drop in inventories of purchased items, and the measure for stocks of finished goods dropped into contractionary territory as logistics recovered.”


Mexican goods producers faced another sharp deterioration in business conditions in May, with ongoing coronavirus restrictions causing many factories to remain closed.

Demand conditions continued to soften, with new orders falling further, partially driven by a marked decline in exports, IHS reported. In addition, firms continued to lay off workers, as they faced softer inflows of new business and restrictions limiting production capacity.

Manufacturers surveyed remained pessimistic on their business outlook, but the degree of negativity was softer than in April. The seasonally adjusted IHS Markit Mexico Manufacturing PMI pointed to a softer deterioration in business conditions across the Mexican manufacturing sector. However, the rate of decline remained sharp, with many businesses staying closed amid coronavirus lockdown restrictions.


There was a noticeable easing in the recent downturn in the euro area manufacturing sector during May, as evidenced by a six-point rise in the IHS Markit Eurozone Manufacturing PMI to a two-month high. However, the index still indicated a considerable rate of contraction in operating conditions, with all market groups continuing to record notable deteriorations in operating conditions, led by investment goods producers.

In most instances rates of contraction were still severe, although Italy, with a more than 14-point monthly increase in its PMI, was the best-performing and registered a relatively modest deterioration compared to other countries. Germany, in contrast, recorded the lowest PMI of all countries, followed by Spain.


Indian manufacturers recorded another sharp deterioration in business conditions during May, as weaker demand drove output lower following April’s record decline. Consequently, companies cut staff at the quickest pace since data collection began over 15 years ago.

New orders placed with goods producers continued to fall after April’s record contraction. The rate of decline decelerated, but was still the second-fastest since the series’ inception in March 2005.

Survey panelists often cited prolonged closures at their customers as the main cause for the reduction in sales. Weak demand from international markets added to the deteriorating sales trend, with new business from abroad plunging further in May.


The Vietnamese manufacturing sector continued to feel the effects of the pandemic during May, although the sector saw a softer contraction than in April as the virus was brought under control in the country.

Output, new orders and employment all decreased at rates unseen prior to the current crisis. There were particular reports of difficulties in securing new export orders.

Firms lowered their output prices again to try to attract new business, with input costs also falling marginally. Although seeing a softer decline in business conditions than in the previous month, disruption from the pandemic led to a sixth successive monthly decline in manufacturing production. Some firms resumed operations, but some respondents highlighted particular weakness in demand for new export orders, which fell more quickly than total new business.