US manufacturing expands on order front-loading, but jobs fall | PiQ Markets
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US manufacturing expands on order front-loading, but jobs fall
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IN SHORT
US manufacturing activity expanded in June, driven by a four-year high in new orders as businesses front-loaded purchases. Despite this surge, factory employment declined to a six-year low due to increased operating costs. Meanwhile, Mexico's economy saw its sharpest monthly growth in over five years in April, expanding 1.2% primarily due to strong performance in its secondary sector. In contrast, India's private sector growth slowed to a three-month low in June, impacted by weakening demand across both manufacturing and services, leading to a decrease in business confidence.
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Key Numbers
four-yearhigh for new orders in US manufacturing
six-yearlow for US factory employment
1.2%monthly economic growth in Mexico in April
five yearssharpest monthly increase in Mexico's economy
three-monthlow for India's private sector growth
Who's Involved
US
country experiencing manufacturing expansion and job decline
Mexico
country with sharpest monthly economic increase in five years
India
country with slowing private sector growth due to weak demand
PMI survey
source of data on India's business confidence
Key facts
US manufacturing activity rose in June.
New orders in US manufacturing hit a four-year high in June.
US factory employment dropped to a six-year low in June.
Mexico's economy grew 1.2% in April from the previous month.
Mexico's April monthly economic growth was the sharpest in over five years.
Mexico's growth was driven by its secondary sector, including construction and manufacturing.
India's private sector growth slowed to a three-month low in June.
Weak demand impacted both factory and services activity in India in June.
Business confidence in India fell to its lowest level since January.
A PMI survey reported on India's economic conditions.
US manufacturing activity experienced an expansion in June, with new orders reaching a four-year high as businesses engaged in preemptive stocking. This surge in orders, however, was juxtaposed with a significant drop in factory employment, which fell to a six-year low. The decline in jobs is attributed to rising operating costs faced by manufacturers.
In Mexico, the economy demonstrated robust growth in April, recording its sharpest monthly increase in over five years. The economy expanded by 1.2% from the previous month, exceeding analyst expectations. This expansion was largely fueled by a strong performance within the secondary sector, encompassing construction and manufacturing.
Conversely, India's private sector witnessed a slowdown in its growth pace, reaching a three-month low in June. Both the manufacturing and services sectors experienced dampened activity due to weakening demand. Consequently, business confidence in India's private sector also declined, hitting its lowest level since January, according to a Purchasing Managers' Index (PMI) survey.
The contrasting economic trends highlight varying global economic pressures and domestic factors influencing key industrial sectors across major economies.
↳ Why This Matters
US manufacturing activity experienced an expansion in June, with new orders reaching a four-year high as businesses engaged in preemptive stocking. This surge in orders, however, was juxtaposed with a significant drop in factory employment, which fell to a six-year low. The decline in jobs is attributed to rising operating costs faced by manufacturers.
Frequently asked questions
A reading above 50 indicates growth in manufacturing. The June reading of 55.7 is the highest since May 2022, suggesting a robust expansion.
Rising operating costs, particularly for raw materials, and concerns over the sustainability of demand led manufacturers to cut jobs.
The conflict is straining supply chains and driving up commodity prices, prompting businesses to preemptively order goods to avoid shortages and higher prices.
The Fed kept rates steady but indicated that policymakers expect to raise borrowing costs later this year due to concerns about inflation.
What Happens Next
01Customer stockpiling efforts driven by the Middle East war are likely to fade in the months ahead.
02Federal Reserve policymakers are expected to consider further interest rate hikes this year.
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