Factories across the globe continue to ease the impact caused by the coronavirus pandemic in August as massive fiscal and monetary stimulus helped the global economy to gain traction from a downturn prompted by the health crisis. JP Morgan said the global manufacturing activity index reached 51.8 in August, the highest in 21 months and rising from 50.6 in July. The index has been staying above the 50-point benchmark for two months.
The US manufacturing purchasing managers’ index (PMI) rose from 54.2 in July to 56 in August, the highest since November 2018. The new order sub-index increased to the highest level in more than 16 years, the PMI survey showed. Meanwhile, Canada’s manufacturing PMI rose to its highest in two years.
Eurozone manufacturing PMI dropped slightly from July’s 51.8 to 51.7 last month but managed to stay above the 50-point threshold. The bloc’s manufacturing output rose for a second straight month. Eurozone’s unemployment rate nudged up to 7.9% in July, but consumer prices dropped in August. Manufacturing activity in Germany continued recovering last month, but French factories saw activity contract to below the 50-point mark.
Last month, factory activity in China extended growth at the quickest rate in almost ten years. A private PMI survey showed the index rose to 53.1 in August from 52.8 in July. Chinese manufacturers were ramping up production to meet improving demand. Taiwan, India, and Indonesia also saw their manufacturing activity improve last month. In contrast, Japan, South Korea, the Philippines, Vietnam and Malaysia had their factory activity drop.
Economists said the mixed results as a sign that Asia’s manufacturing recovery remained patchy. Many of them also expected the recovery to be choppy as resurging numbers of new infections prevent some economies from reopening fully. Fears on new infection waves also discourage global firms from ramping up capital spending, they noted. The manufacturing sector is expected to continue facing the coronavirus headwinds in the coming months.
