Global Manufacturing Growth Continues to be Challenged

Global manufacturing activity continues to expand as business sentiment in major manufacturing hubs remained strongly positive in April 2022, albeit the pace of growth continues to moderate. This is primarily due to contraction in some major manufacturing economies globally and slight moderation in others. Manufacturing Purchasing Managers Index (PMI) for the overall global economy continues to slide down from the most recent peak at 56.0 in May 2021, reflecting positive but weakening sentiment over the last one year. Manufacturing PMI for the US and Eurozone indicated very positive outlook in the two economies for the most recent month, while Japan, India and Australia also maintained strong sentiment for the manufacturing sector. Sentiment in China slowed down yet again since December 2021, and the activity again shows signs of contraction as opposed to the almost neutral sentiment two months ago.

Global manufacturing PMI fell to 52.2 in April 2022 from 52.9 in March 2022. However, it has remained above the neutral level 50.0 since August 2020. The slide in manufacturing activity comes majorly due to strict COVID-19 policies in China, which have led its manufacturing activity to contract over the last few months. Excluding China, global manufacturing output index (part of the global manufacturing PMI) reflected strong positive sentiment, increasing slightly to 53.2 in April 2022 from 53.1 in March 2022. Another factor impacting the business sentiment was a slowdown in export orders in countries such as China, Germany, Japan, and France among others, while North America, India and Australia saw growth in export activity.

Employment in manufacturing sector globally continued to rise, but the pace was slowest in April 2022 since the beginning of this year. As expected with the activity levels, employment saw a rise in the US, EU, Japan, India and Brazil, while it saw a decline in China. A major deterrent to manufacturing activity globally remains increasing inflationary pressures which increased input costs across all sectors. Average purchase price increased by one of the greatest extents in the last 11 years. This was exacerbated by longer supplier lead times due to supply chain disruptions.

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