World production fell in April to its lowest level since the 2008 financial crisis

The economic downturn resulting from the outbreak of the coronavirus disease COVID-19 continued to hit the global industry hard throughout April. The rate of decline in production and new orders was among the highest in 22 years of research history and the worst since the 2008/09 global financial crisis. Business confidence was hit hard, falling to a new all-time low. The cyclically sensitive ratio of new orders to inventory also fell to its lowest level on record. JPMorgan Global Manufacturing, a composite index created by JPMorgan and IHS Markit in partnership with ISM and IFPSM, fell to 39.8 in April, its lowest level since March 2009. The overall decline was mitigated by the recent relative resilience of mainland China PMI. The world’s PMI, excluding mainland China, was 35.8, up from 46.2 in March.
Main conclusions
Production volumes and new orders are falling at almost record rates.
New export earnings are falling the most at record levels.
Business Confidence at Lowest Decline in Series History

Production and new orders in April experienced an equally sharp decline, with the rate of decline being the third and fourth fastest. in the poll history, respectively. International trade flows also stopped abruptly, with new arrivals in export orders falling the most in the PMI. New export orders fell to record lows in almost all countries except Japan, China and Taiwan, which are still signaling declines.

The vast majority of nations-covered countries saw their output and new order indices fall to their lowest levels. This included all countries included in the Eurozone PMI (Germany, France, Italy, Spain, Netherlands, Austria, Ireland and Greece), UK, Poland, Russia, Czech Republic, Canada, Mexico, India, Turkey, Indonesia. Vietnam, Malaysia, Philippines, Australia, Brazil, Colombia, Myanmar and Kazakhstan.

Other countries have tended to see near-record cuts, including the United States, Japan and South Korea. The main exception was China, which was the only country to see a small increase in production and by far the smallest decline in new order consumption. If China data are excluded from the global index calculation for output and new orders, readings are the lowest and second highest on record, respectively.

In April, global industrial employment contracted at the fastest pace in nearly 11 years. All countries covered experienced declines in their workforce, with almost all countries also experiencing accelerated job losses. This number includes 13 countries that have recorded a record decline in the workforce (including the UK, India, South Korea, Canada, Mexico, Australia, Malaysia, Vietnam and Indonesia).

In April, both production costs and sales prices fell. The rate of decline in output costs was the steepest in the series’ history. COVID-19 has caused major disruptions in global supply chains, with average supplier shipments delaying the steepest in 22-year research history.

A JPMorgan economist said: “The continued impact of the global COVID-19 pandemic resulted in significant disruption to industrial activity in April. Production and new orders fell at near-record levels as demand, international trade flows and economic sentiment were constrained by restrictions to halt the spread of the virus, shutdowns and shortages of materials and labor. Only time will tell how severe the damage done to global supply chains is, although measures taken in many countries to ease blockages may serve as a guide in the coming weeks and months. ”

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