Global Factory Output Contracts for the First Time in 80 Months

(Bloomberg) -- The world’s most powerful leaders gathered at the Group of 20 summit in Osaka, Japan last week for meetings that may help set the direction of the global economy. 

These talks occurred as global manufacturing contracted for the second consecutive month. Two months of contraction in global trade has not happened in six-and-a-half years, according to the J.P. Morgan Global Manufacturing Index.

The contractions in global manufacturing were widespread. Factory output fell for the first-time in six-and-a-half years.

June data signaled the 10th contractionary reading in a row in new export orders in the manufacturing sector. Overall new orders have failed to show a gain in four of the last five months. Employment contracted in both May and June. Employment was last negative in Aug. 2016.

The pace of input price growth slowed for the eighth month, easing by 10.2 points from a year earlier, to a 39-month low. Meanwhile, the rate of increase in prices factories are charging also reached a nearly three-year low.

The global outlook was subdued in June. Business optimism dipped further to the weakest point since data on sentiment were first compiled in July 2012.

The global firm purchasing index is compiled by IHS Markit and based on the results of surveys covering tens of thousands of purchasing executives in dozens of countries.

These countries represent about 98 percent of global gross domestic production.

To contact the reporter on this story: Alexandre Tanzi in Washington at atanzi@bloomberg.net

To contact the editors responsible for this story: Alexandre Tanzi at atanzi@bloomberg.net, Chris Middleton

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