Global Manufacturing Growth Plateaus in June

After a sharp acceleration during much of 2003, manufacturing growth around the [statistically known] world seems to be stabilizing. In the purchasing managers surveys compiled by NTC Research in London in collaboration with JPMorgan, growth eased in June to a 56.5% reading from May's 57.6% level. These data begin in 1998. The May level was a record high; the lowest was 41.6 in October 2001. In this most recent few months, the European region has had the greatest acceleration, but the US has the strongest readings, i.e., the strongest sustained growth pace.

The consolidation process is possibly fostered by high energy prices. Their impact is seen in the accompanying graph series on "input prices". Last time those prices ran up, in early 2000, world manufacturing entered a marked slump. It's clearly too soon to tell what the response will be in the current episode, and with such a short data history, it's also premature to assert a hard and fast conclusion about whether another slump would follow now, on the basis of just one previous example. Various regions also behave differently, as noted in the table below. Russia's slump, for instance, had occurred in the late 1990s, and it did not participate in the 2001 recession. Japan, by contrast, was weaker than other regions during that recession, so its recent rebound looks quite optimistic. So perhaps the present manufacturing consolidation will lead, not to renewed slump, but to a more sustained expansion.