In July, the global manufacturing PMI (purchasing managers index) increased by 0.1 percentage points to 47.9%, ending four consecutive months of month-on-month decline, according to data released by the China Federation of Logistics and Purchasing. However, analysts warn that despite this slight improvement, the global economy is still facing a downward trend.
Qi Zhengyan, an analyst at the China Logistics Information Center, stated that the PMI has remained below 48% for two consecutive months, indicating that the global economic downturn has not changed. While the Asian region has shown steady growth, the manufacturing industry in Europe and the United States continues to weaken, putting additional downward pressure on the global manufacturing industry.
Factors such as slow core inflation, tight monetary policies in developed economies, and increased uncertainty in the financial market environment are dragging down the pace of global economic recovery. The International Monetary Fund (IMF) also forecasted low global economic growth for this year, predicting a 3% growth rate in 2023.
Breaking down the data further, the Asian manufacturing PMI increased to 50.5%, indicating continued steady growth for seven consecutive months. China’s manufacturing PMI has also risen steadily for two consecutive months, pointing towards a stabilizing and well-operating economy. India’s manufacturing industry experienced a slight slowdown but maintained a relatively high growth rate. South Korea and Vietnam’s manufacturing industries saw a narrowed decline, showing signs of rebound. However, Japan’s manufacturing industry continued to contract.
Qi Zhengyan highlighted that Asia’s manufacturing industry is exhibiting continuous and steady growth, mainly driven by the stable operation of China’s manufacturing industry. The high-speed growth of India also contributes positively to the Asian economy. As China’s macro-control policies continue to strengthen, it is expected that China’s manufacturing industry will rebound in the second half of the year, providing momentum for global manufacturing growth. The IMF also maintained its forecast for China’s economic growth rate, expecting it to grow by 5.2% and 4.5% this year and next, respectively.
In contrast, the European manufacturing PMI declined to 44.8%, marking a six-month continuous decline and remaining below 50% for twelve consecutive months. The manufacturing industry in the Americas also exhibited weak performance with a PMI of 47% for nine consecutive months. Qi Zhengyan attributes this to high inflationary pressure in Europe, where continuous rate hikes have failed to ease core inflation.
The ISM report highlighted that despite a slight increase, the U.S. manufacturing PMI remains low, below 47%. Qi Zhengyan believes that although U.S. inflation has eased, the direction of the Federal Reserve’s tightening monetary policy remains unchanged. The recent interest rate hike by the Fed, resulting in the highest interest rates in 22 years, has increased expectations for a slowdown in the U.S economy.
It is important to note that Oriental Fortune publishes this content for informational purposes only and does not provide investment advice. Readers should proceed accordingly and assume their own risks. The source of this article is the Securities Daily, and the author is Meng Ke.