Manufacturing Indices Show Recession Is Global

July 1, 2019 (EIRNS)—Purchasing Managers’ Indices of manufacturing, published all over the world today for the second quarter, show that a global recession is under as measured by manufacturing and industry. Exceptions are some nations central to China’s Belt and Road Initiative infrastructure projects, but the advanced-sector economies are all falling.

The manufacturing sector of China itself, like the U.S. manufacturing sector, has stopped expanding this year. Behind the noise of all the indices and sub-indices based on surveys—two such for June were published in China today, one a government survey of state-owned enterprises and the other a private survey of SMEs, both appearing to show contraction by a small margin—the consistent picture is one of manufacturing stagnation since the beginning of 2019. This is also true of U.S. industrial production and manufacturing employment data. In China, it appears that what is actually contracting is manufacturing for export; for example, that sub-index of the China’s official NBS Manufacturing Index was at 46.3 in June, which is well below zero growth.

Many other Asian manufacturing indices for June show zero growth or below: Taiwan 45.5; South Korea 47.5; Japan 49.3; Australia 49.6; Malaysia 49.9. But Indonesia, Philippines, Thailand, Vietnam, and Sri Lanka continue to show manufacturing expansion. This is “soft” data from surveying purchasing managers and CEOs of SMEs, but it shows impact on manufacturing of the general situation of stagnation in world trade.

One Purchasing Managers Index for U.S. manufacturing released today is that of the firm Markit, whose chief economist is Chris Williamson. His comment:

“U.S. manufacturers reported business conditions have remained the toughest for nearly a decade in June. The past two months have seen the lowest readings since the height of the global financial crisis in 2009. The survey ... paints a worrying picture of marked declines in both output and jobs. The June survey sub-index readings are consistent with manufacturing output contracting at a quarterly rate of 0.7% and factory payrolls falling by 18,000.”

Contraction in the German, Italian, and French indices was certainly no surprise.

The so-called “global purchasing managers’ index,” put out by JPMorgan, piggybacks on all the others. The economist compiling it, Olya Borichevska, summed up:

“The global manufacturing sector downshifted again at the end of the second quarter. The PMI surveys signaled that output stopped growing, as inflows of new business shrank at the fastest pace since September 2012.... Conditions will need to stage a marked recovery if manufacturing is to revive later in the year.”