Global manufacturing output soared in March to reach a 10-year high as COVID-19 vaccination drives gathered pace in the first quarter of 2021. The composite Global Manufacturing PMI of JPMorgan and IHS Markit increased to 55 in March, which is its highest since February 2011.
The sub-indices for output, new orders, new export orders and employment grew at a faster rate with the Euro area, Taiwan and the US leading the growth rankings, stated the IHS Markit report. Business conditions in the manufacturing sector improved in Q1 despite rising costs and supply disruptions. Demand exceeded supply leading to a substantial increase in input cost and the sub-indices for input and output prices indicating Inflationary pressures. Slower decrease of on-hand inventory and longer vendor processing times favoured manufacturers.
Euro area registered its highest combined PMI on record, marked by unmatched growth in German and the Netherlands, followed Austria, Eurozone and Taiwan, Italy, France, the US and UK and Canada among the top 10 nations. Japan and China also reported improvements, but their PMIs are below average. The Global Manufacturing PMI excludes India, Mexico, the Philippines and Colombia due to later-than-usual data releases.
Germany manufacturing PMI charted an all-time high of 66.6 amid increased new orders from the US and Asia, especially China. Production volumes were ramped with the rate of growth breaking the prior record of April 2010. In the Eurozone, despite massive supply-side delays that lifted input costs to a decade’s high, the manufacturing PMI rose to 62.5 on higher output supported by new orders, improved purchases and exports.
In Taiwan, business conditions improved at the faster rate in 11 years. Rising demand both in the domestic and export markets boosted output and new work orders. Purchasing hit a historical higher, however, shortages at suppliers and shipping delays resulted in severe supply chain disruption, worst in last 17 years, which in turn raised input costs and output charges.
Manufacturing output in the US improved at its second-strongest pace since May 2007. New order rose but production was hindered by tight supplies. Inflationary pressures rose at a faster rate for the last 10 years forcing companies to pass on part of the higher input costs leading to the sharpest hike in output charges since the collection of data.
In March, employment increased for the fifth successive month and is at the highest level since November 2018. All countries registered job growth, except China and Brazil. Business optimism slid marginally from the prior month.