The S&P Global Manufacturing Purchasing Managers’ Index (PMI) stood at 44.4 in June compared to 48.5 in May. The index slipped below the 50 threshold, signaling a sharper deterioration in business conditions than the previous month.
Both production and new orders declined markedly in June due to supply disruptions, high inflation and ongoing geopolitical turmoil. In addition, employment has declined. On the price side, production costs continued to rise amid high energy and raw material costs, while product prices continued to rise markedly. At the same time, the growth rates of both production and production costs were more moderate than in May. Finally, company confidence in the future has fallen to its lowest level since the height of the first wave of Covid-19 in 2020.
Commenting on the results of the latest survey, Paul Smith, an analyst at S&P Global, said:
“Perhaps some hope can be found in price indexes, which are finally showing clear signs that inflationary pressures are easing as supply constraints become less acute. However, they are most likely caused by a reduction in demand, and it remains to be seen how far the recession will have to finally return us to a semblance of supply and demand equilibrium.
FocusEconomics experts expect fixed investment to increase by 6.2% in 2022, down 0.5 percentage points from last month’s forecast. In 2023, the group expects fixed investment growth of 6.3%.