Manufacturing activity in the world’s major economies bounces back

For a few months now, the manufacturing activity of the world’s major economies has shown an upward trend, as can be seen by the new index figures reported by each country.

Countries around the world have been reporting solid growth over the past few months, particularly major economies, which have reported manufacturing activity figures not seen for years.

The most representative case is undoubtedly China, where growth in manufacturing activity for July this year was the highest reported in the past nine years, according to the Caixin Manufacturing Purchasing Managers’ Index, which exceeded all expectations and reached 52.8 l

Wang Zhe, Senior Economist at Caixin Insight Group, believes that with this the new outbreaks of the epidemic in some regions of China seem not to have affected the improving trend of the manufacturing economy which continued to recover as the outbreak control measures were lifted.

The good news adds to the 3.2% Gross Domestic Product (GDP) growth recorded by China during the second quarter of the year, compared to the 6.8% drop in the first three months, the GDP is therefore expected to show greater growth over the third quarter.

As regards Japan, Au Jibun Bank’s manufacturing PMI managed to increase to 45.2 points from 40.1 in June, however it has not reached the projected growth.

While in South Korea, the IHS Markit Manufacturing PMI reached 46.9 points, up from 43.4 in June.

In Oceania, Australia has reported critical numbers of infected people and in recent week has imposed new outbreak restrictions in major cities, experiencing a 53.5 point increase in July compared to 51.5 in June.

U.S. Manufacturing Growth

In the United States, the manufacturing industry also reported positive figures, as production in July reached its highest level since March 2019, that is, long before the outbreak.

According to the Institute for Supply Management (ISM), the manufacturing activity index in plants reached 54.2 points and moved up from the 52.6 points reported in June, making it the second consecutive month the industry has shown growth, exceeding the market expectation of 53.6 points.

Timothy Fiore, Chairman of the ISM Manufacturing Business Survey Committee stated that demand and consumption continued to drive this growth, with inputs that were able to meet the supply and demand.

This figure comes as good news as it would seem that the extensive blockade suffered by the economy during the second quarter is finally over, despite the increase of COVID cases in various states where restrictions have not been lifted.

The growth situation in Europe

As regards Europe, the third quarter saw a strong rebound in July when the Purchasing Managers’ Index (PMI) went from 47.4 in June to 51.8, representing the first signs of growth in the European sector in a year and a half.

The recovery is spearheaded by Spain, who saw a rise to 53.5 points, up from 49 the preceding month, while in France the index reached 52.4 in July, up from 52 points in June.

Meanwhile, Germany and Italy again reported growth figures which, although lower, represent a significant increase from previous numbers. Germany grew from 45.2 to 51 points, while Italy grew from 47.5 to 51.9.

In the UK, the index rose to 53.3 points from 50.1 and although it may be perceived as a positive aspect, it did not actually reach the 53.6 points projected by the market.

Chris Williamson, Economist and Head of IHS Markit, said that European production plants got off to a very positive start in the third quarter, as production grew at the fastest rate in more than two years, driven by an encouraging increase in demand.

Manufacturing growth in Latin America

In Brazil, the sector’s rebound was the fastest ever recorded, as, in the midst of the reopening and return to production, the IHS Markit PMI index rose to 58.2 points in July and 51.6 in June.

According to Paul Smith, Director of Economics at IHS Markit, this record growth helped to significantly reduce the production gap that had begun to show in face of the pre-outbreak perspective.

Meanwhile, Mexico did not achieve growth, but experienced an increase in the manufacturing sector, reaching 40.4 points from 38.6 points in June.

In light of this, Oradel Industrial Center offers competitive advantages to manufacturing companies looking to establish operations in Mexico in a space with all the necessary services that is only 10 minutes away from international bridges.