The S&P Global Manufacturing Purchasing Managers Index (PMI) fell from 52.3 in May to 49.0 in June, the lowest reading since August 2020. Consequently, the index fell below the critical threshold of 50 points, which separates growth from contraction in activity in the manufacturing sector. compared to the previous month.
The June data mostly reflected a faster fall in new orders, a slight cut in production and job cuts. Meanwhile, backlogs fell for the first time since October 2020. On the price front, operating costs continued to rise amid a sharp rise in energy prices, albeit at the slowest pace in 16 months. Consequently, product prices rose more moderately, although still at a high rate. Finally, output expectations fell to their second lowest level in two years due to concerns about inflation and consumer spending.
Commenting on the release, Sian Jones, senior economist at S&P Global, said:
“The downside risks to production growth remain numerous. Key among them for the participants of the discussion was the impact of inflation on the costs of clients and investors. Output expectations have declined, with our most recent forecast looking for a 0.9% increase in industrial production in 2022.”
FocusEconomics experts predict that fixed investment will grow by 6.3% in 2022, which is unchanged from last month’s forecast, and will grow by 5.2% in 2023.