Key findings

• Manufacturing PMI at 55.0 in March
• Solid growth across consumer, intermediate and investment goods sectors
• Euro area, US and Taiwan lead global growth rankings

Conditions in the global manufacturing sector continued to brighten at the end of the first quarter, despite the potential for growth to be stymied by rising cost inflationary pressures and supply-chain disruptions.

The J.P.Morgan Global Manufacturing PMI™ – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – rose to 55.0 in March, a 121-month high and its best reading since February 2011. The level of the PMI was supported by stronger growth of output, new orders and employment. A slower decrease in stocks of purchases and lengthening of vendor lead times also had a positive impact.

Notes: Due to later-than-usual release dates, March 2021 data for Colombia, India, Mexico and the Philippines were not available for inclusion in the global manufacturing figures.

PMI readings were above 50.0 – signalling improvement – in 23 out of the 27 surveys for which March data were available. Five of the six top-ranked nations were located in the euro area (Germany, the Netherlands, Austria, Italy and France), taking the combined PMI for the currency bloc to its highest on record, with unsurpassed readings also registered in both Germany and the Netherlands. Outside the euro area, the strongest improvements were seen in Taiwan and the US. Improvements were signalled for Japan and China, but both PMIs were below the global average.

Sub-sector PMI data indicated that operating conditions improved across the consumer, intermediate and investment goods industries in March. The highest PMI reading was for intermediate goods (121-month high) followed closely by investment goods (two-month low). Growth improved to a 37-month record in the consumer goods category.

Manufacturing production increased at one of the quickest rates over the past decade, underpinned by the strongest expansion of incoming new work for just over a decade. International trade flows also picked up pace, with growth of new export business the steepest since January 2018.

Efforts to raise production further were stymied by supply-chain disruptions in March, with input delivery schedules delayed by longer vendor lead times. The increase in supplier delivery times was the second-greatest extent on record, surpassed only by April last year. The combination of increased new orders at manufacturers and supply-chain delays was the main factor underlying a sharp rise in backlogs of work, the steepest since May 2010.

Demand outstripping supply also contributed to a marked increase in purchasing costs during March. Input price inflation surged to a near-decade high, the pass-through of which led to the steepest rise in output charges since data on selling prices were first tracked in October 2009.

Manufacturing employment rose for the fifth consecutive month in March, and to the greatest extent since November 2018. Jobs growth was registered in almost all of the nations covered, with notable exceptions being decreases in China and Brazil. Business optimism dipped slightly from February's 81-month high.