Global manufacturing activity expands in January

This was driven by a rise in new orders, output, and suppliers' delivery times.

Global manufacturing activity has increased to 50.1 in January, indicating the first slight improvement in operating conditions in seven months, an S&P Global survey said.

There were notable regional differences, with business conditions influenced by factors such as the potential imposition of US tariffs in the coming year.

Three of the five PMI sub-indices – covering output, new orders, and suppliers' delivery times – positively contributed to the overall index at the beginning of the year. In contrast, employment and purchase inventories continued to decline.

Global manufacturing production returned to expansion in January after a minor contraction in December, primarily driven by a rise in new orders.

Amongst major industrial countries, India led the growth, whilst the US experienced a significant turnaround, achieving output growth at a seven-month high, breaking a five-month streak of contractions before the end of the previous year. China also saw an increase in its rate of expansion. However, disparities between regions persisted, with ongoing declines in the eurozone, Japan, and the UK, albeit at slower rates for both the eurozone and the UK.

Sector-specific output PMI data further revealed ongoing performance differences. Growth in the consumer goods sector picked up to a seven-month high, supported by a robust increase in new orders. Production and new business in the intermediate goods sector also returned to expansion after recent downturns. Meanwhile, conditions remained weak for investment goods manufacturers, with both output and new business declining for the eighth consecutive month.

Global manufacturing new export orders contracted again in January, extending the current downturn to eight months. Nonetheless, the rate of decline was the weakest during this period. The region of Asia, excluding Japan and mainland China, recorded its strongest growth on average since May 2024, while contractions in China, the US, Japan, and the euro area eased.

The improvements in output and new order volumes in January did not translate into the labor market, with staffing levels reduced for the sixth month in a row and at the greatest extent seen in the past four-and-a-half years, matching the rate of job losses recorded in October 2024. Although there were increases in employment in the US, Japan, and India, these were not enough to fully compensate for job cuts in China (the fastest decline in nearly five years), the euro area, and the UK.

Price pressures increased in January, with input cost inflation climbing to a five-month high, resulting in a sharper rise in manufacturers' selling prices. Meanwhile, average supplier performance worsened for the eighth straight month. Inventories of both purchases and finished goods, as well as input buying volumes, fell.

“The JPMorgan global manufacturing output PMI rebounded back above the neutral 50-mark to 50.6 in January. Solid gains in the new orders and future output PMIs (which rose by 1.3 and 2.6pt respectively) also point to improved growth momentum at the start of the year," Bennett Parrish, Global Economist at J.P. Morgan, said.

"Regional disparities remain, however, with solid PMI levels in the US and China contrasting with continued indications of weakness in the Euro Area and Japan. The improving trend is yet to be reflected in hiring, with the global employment PMI weakening 0.9pt to a four-and-a-half year low of 48.5 in January."