Global PMI hits five-month high as manufacturing outpaces services

The J.P. Morgan Global Composite PMI Output Index rose to 52.6 in July from 52.0 in June, reaching its highest level since February and signaling an acceleration in worldwide economic activity, according to data released August 6 by S&P Global ↘ 1.17%.seekingalpha+1

The 0.6-point increase narrows most of the gap with the index's pre-conflict average and points to global GDP growth running at an annualized rate of approximately 2.6% at the start of the third quarter — only modestly below the long-run average of 2.9%.seekingalpha

Manufacturing Drives the Expansion

In an unusually sustained development, manufacturing outpaced services in terms of output growth for a fifth consecutive month in July. Technology and machinery sectors led gains, with tech equipment seeing its fastest growth since May 2021, fueled by AI-related demand and increased defense spending. Forward-looking indicators also improved, with new business and future output indexes both reaching five-month highs.glensidelocal+1

The strength in manufacturing was echoed in U.S. data. The ISM Manufacturing PMI registered 55.6% in July, up 2.3 percentage points from June and its highest reading since May 2022, with fifteen of eighteen tracked industries reporting growth. Production jumped to 58.5% — a nearly five-year high — and employment returned to expansion for the first time in 33 months.prnewswire+2

Broad-Based but Not Without Risks

The global survey covered more than 40 economic regions and showed lower inflationary pressures alongside the growth pickup. Consumer services rebounded on favorable macroeconomic factors, though some gains were attributed to one-off events including the World Cup, raising questions about sustainability.glensidelocal+1

Banking activity remained a soft spot, with weak expansion and slower order growth signaling potential headwinds. S&P Global noted that while momentum in manufacturing slowed somewhat amid high prices, uncertainty, and reduced stock building, the broader growth trajectory remained intact. The conflict in the Middle East continues to pose a background risk to the outlook, though the PMI data suggest economies are adapting to the disruption.seekingalpha+3