Manufacturing production rose at the fastest pace since November 2020, with three of the four largest emerging market economies—Brazil, India, China—all registering faster expansions in manufacturing output.

In particular, goods production in China unfolded at the quickest pace in two years, with firms in the consumer segment recording especially sharp growth in June.

Further improvements into the second half this year were also hinted by forward-looking order book indicators, albeit with the likelihood of a slower growth pace, it noted.

Moreover, optimism cooled midway through 2024, hitting a four-year low. Manufacturers were less upbeat amid concerns over the economic outlook and rising costs, Jingyi Pan, economics associate director at S&P Global Market Intelligence wrote on its website.

Input price inflation climbed to a ten-month high, driven by a faster increase in manufacturing sector costs. Easing inflation in the service sector meant, measured overall, output prices rose at a rate largely unchanged over May.

The gross domestic product-weighted emerging market purchasing managers’ index output index fell to 53.3 in June, down from 54.3 in May. This nevertheless extended the sequence of growth to one-and-a-half years.

Alongside the expansions in developed markets, the sustained emerging market upturn signals worldwide economic growth of an annualised rate of 3 per cent in June, according to PMI indications.

Among the four major emerging market economies, India once again consequently recorded the fastest rate of expansion across both manufacturing and services combined. Furthermore, the rate of expansion accelerated from May for India, while Brazil also saw faster overall output growth.

In line with the global trend, emerging markets new orders rose at a more moderated pace in June. This was amidst slower inflows of new work in both the manufacturing and service sectors in June. Export orders have likewise increased at slower rates, though remaining in growth territory, contrasting the global trend which saw trade conditions deteriorate marginally.

Business confidence fell among emerging market firms, with the future output index posting the lowest reading in four years. Concerns over the outlook, coupled with jitters over rising costs and the impact on margins, were listed as reasons for the less upbeat outlook among both manufacturers and service providers in June.

Average input costs continued to rise for emerging market firms. This stemmed primarily from an accelerated increase in manufacturing sector input prices, which increased at the fastest pace in nearly two years, Pan added.

Fibre2Fashion News Desk (DS)