PMI: price pressures continue to build, reaching very high levels

The global manufacturing hardly moved in May, which shouldn’t come as a surprise, given its already high level. The index improved further in the US and edged higher in the Eurozone where Greece, Ireland, Italy, the Netherlands and Spain saw a noticeable improvement. Germany was weaker. The UK was up strongly. The reading for China hardly changed whereas it dropped in India.

The global services PMI continued its fast acceleration in May, underpinned by a jump in the US and the euro area. In the latter, the index for France recorded a huge increase but Ireland, Italy and Spain were also up strongly as well. The improvement in Germany was less big. The number for Japan was disappointing with the PMI dropping 3 points. China was also weaker. The index plunged in India, which doesn’t come as a surprise considering the level of new infections.

The global composite PMI saw another healthy increase in May, driven by a significant increase in the US and the euro area. Concerning the latter, the national indices improved in all countries where a composite PMI is available. The German index was up somewhat but there were big increases in France, Ireland, Italy and Spain. The number for Japan, after crossing the 50 mark in April, again dropped below this key level in May. The data in China were weaker, though still well above 50 whereas the index plunged in India.

The employment component of the manufacturing PMI had reached very high levels in the advanced economies in recent months, so some loss of momentum wouldn’t come as a surprise. The global number hardly changed in May but it weakened in the US. Data were better for the Eurozone as a whole and in Austria, Germany, Greece –up strongly-, Ireland, Italy and the Netherlands. France saw a weaker number. The picture in emerging economies is mixed and the average level is lower than in the advanced economies. The index declined somewhat in China.

There was little change in the new export orders at the global level. The US and China saw further improvement whereas the number for the Eurozone eased slightly, reflecting a drop in Germany but better data in France, Greece in particular, Ireland, Italy, the Netherlands –up strongly and reaching a high level- as well as Spain. The UK saw a big jump in export orders whereas data for Turkey were weaker dropping below the 50 mark.

Manufacturing input prices keep on rising and the heatmap is red hot for all countries. In May, the increase is particularly impressive in the Eurozone with jumps in Austria, Germany, the Netherlands and for the Eurozone as a whole. The UK and the Czech Republic also recorded a spectacular increase. China also sees higher input prices.

Services input prices recorded a big increase at the global level. All countries except Japan –where prices pressures eased slightly- are firmly in the red zone. The index saw a big jump in the US, Ireland and Italy. It also moved higher in Germany and the UK but eased somewhat in France.

Manufacturing output prices were up strongly at the global level, in the US and in particular in the Eurozone, where Germany saw a big jump and several other countries also recorded big increases. This also applies to the UK, the Czech Republic and Poland.

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