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(Wallace Refiners) – The manufacturing PMI’s across the world have been pretty good so far but there does seem to be a slight struggle to keep up with the numbers from the last month (accept the U.K.). We must remember that a number above 50 still represents expansion so overall the news has been very positive. It could have also been expected that the number may have been slightly lower in comparison to the ones seen in April as that was the month that most countries started to come to terms with the move out of the pandemic.
As we know many goods and products are sent out of Asia. India is currently in the midst of a massive rise in cases and deaths. Some raw materials suppliers have been struggling with getting products out of India and this is adding to woes as shipping costs have risen too.
Delving deeper into the German number, IHS Markit said “While the demand picture for manufacturing remains positive, we are getting more reports from businesses of supply shortages curbing production levels and weighing on new orders due to forced downtime at customers. On top of this, there is also the issue of an associated surge in costs, with supply shortages pushing up factory input prices in May at a rate that easily surpasses anything seen before in the manufacturing survey’s 25-year history. Inflationary pressures are increasingly spreading to services as well, pushing the overall measures of input costs and output prices both to record highs.”.
The overall number beat expectations with some good results from some of the member states. The report confirmed this as it said “it the rest of the region where the strongest increase in business activity was recorded in May, with growth outside of France and Germany hitting the fastest since the start of 2018 thanks to a record jump in manufacturing output and the largest increase in service sector activity since February 2018.”.
The report added that the Eurozone economy revives as demand surges at the fastest rate for 15 years. Factories also reported that new order growth waned slightly for a second month running, but remained the third-highest in the survey’s history and strong enough to generate a new record rise in uncompleted backorders for a third straight month. With raw materials prices rising it seems that the market needs to keep a close eye on inflation figures moving forward.
In the U.K., the private sector has signaled the fastest output growth for more than two decades. Business expectations for the next 12 months edged up to a new record high during May. The manufacturing PMI number reached its highest level since the survey began in January 1992. The report also said new orders increased at the strongest pace since data collection began almost 30 years ago (index at 69.1 in May), exceeding the previous record that had stood since July 1994. Seem like the U.K. is in an economic boom coming out of pandemic lockdowns. Is this what we could expect from other areas in the world?.
Australian Manufacturing PMI 59.9 vs previous 59.7
Japanese Manufacturing PMI (May) 52.5 vs previous 53.6
French Manufacturing PMI (May) 59.2 vs expected 58.5 previous 58.9
German Manufacturing PMI (May) 64.0 vs expected 65.9 previous 66.2
EU Manufacturing PMI (May) 62.8 vs expected 62.5 previous 62.9
U.K.Manufacturing PMI (May) 66.1 vs expected 60.7 previous 60.7
Later on U.S. Manufacturing PMI (May) is expected to hit 60.2 with the previous reading at 60.5
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