Detailed PMI Sector Data Illuminate Global Economic Dynamics
In July, the global economic landscape presented a mixed picture, characterized by varying growth trajectories across sectors. On one end of the spectrum, the services sector experienced sustained, albeit slower growth, prominently led by financial services. Conversely, the manufacturing sector teetered on the verge of stagnation, grappling with diminishing goods orders and declining trade volumes.
The disparity between the service and manufacturing sectors was starkly evident in the Purchasing Managers’ Index (PMI) for July. The service sector’s growth accelerated, marking the second-fastest expansion in 13 months. Meanwhile, the manufacturing sector’s output growth was minimal, reflecting the weakest phase of expansion recorded during its current seven-month uptrend. Notably, while June saw all 25 sub-sectors evade contraction, July depicted a contrasting scenario. Seven sectors reported a decrease in output, the highest proportion witnessed in six months. This downturn occurred amidst a global slowdown in output growth for the second consecutive month, despite maintaining one of the highest growth rates observed over the past year.
A significant factor contributing to the contraction of certain sectors was the global reduction in raw material purchases by manufacturers in July. This decline particularly affected sectors that traditionally supply inputs to other businesses.
Leading the charge in growth once again were sectors such as ‘Other Financials’, Banking, and Insurance. This growth was partly fueled by a further easing of financial conditions observed in July. However, the Real Estate sector experienced slower growth following a high point reached in June, which spanned over two-and-a-half years. Moreover, demand for machinery & equipment, a sector usually driven by capital expenditure, subdued, leading to a reduction in output. The automotive sector also faced a downturn.
The most significant uptick in growth occurred within the software and services sector, aligning with disruptions experienced by CrowdStrike.
Purchasing Managers’ Index™ (PMI) data, compiled for more than 40 economies worldwide, offers invaluable insights into the health of the economic and business landscape. The monthly data, gathered from surveys of senior executives at private sector companies, provide a comprehensive overview of the economy’s overall health through a headline number. Additionally, sub-indices offer detailed analyses of various economic drivers such as GDP, inflation, exports, capacity utilization, employment, and inventories. These datasets, indispensable to financial and corporate professionals, facilitate a deeper understanding of economic and market directions, unveiling lucrative opportunities.
The contrasting trajectories of the service and manufacturing sectors underscore the complex dynamics governing global economic growth. As the world economy navigates through these divergent paths, the PMI data continues to serve as a critical resource for stakeholders aiming to make informed decisions in an ever-changing economic environment.
