In July, aided by a revival in output and new orders, the global manufacturing sector has moved back into the expansion territory. The JP Morgan Global Manufacturing purchasing managers index (PMI) rose to a six-month high of 50.3 in July, up from 47.9 in June.
For the first time since January, the index is back above the neutral 50 mark. A PMI reading above 50 separates expansion from contraction.
The survey report showed that of the 27 nations for which July data were available, 13 had PMI readings above the crucial 50-mark. However, global manufacturing employment fell for the eighth month in a row in July, the slowest rate since March. Job losses were seen across the consumer, intermediate and investment goods sectors, the report said.
Bleak employment outlook amid the pandemic hurts consumption as income declines. Regional outbreaks of COVID-19 and lockdowns imposed to curb them pose a risk to the rebound seen in global manufacturing activities.
"The July PMI indicates that the recovery which began in May continued into mid-summer. Many of the PMI components reached their pre-pandemic levels for the first time in July including output and new orders. The employment PMI has not recovered suggesting labor markets will take longer to improve. Still, to fully recoup the losses sustained in the first half of the year will still take some time, especially if the recovery is knocked off course by any future re-tightening of restrictions," said Olya Borichevska, global economist at JPMorgan, as quoted in a Mint report.