Manufacturing Index Falls Across Global Economies, Tariff Uncertainties Impact Output

In a troubling sign for the global economy, manufacturing output across major economies shrank in April, marking the first contraction of the year. The latest reading from the JPMorgan Global Manufacturing Index dropped to 49.8, down from 50.3 in March, indicating a slip into contraction territory.

A reading below 50 signifies declining activity. This downturn has been attributed to weakened demand, falling orders, and a slump in factory employment, all exacerbated by lingering uncertainty around US trade and tariff strategies, reported Bloomberg.

The outlook among manufacturers has dimmed, with the future output index now at its lowest point since October 2022. Since President Donald Trump’s election in November, the index has declined by 4.5 points, highlighting the cumulative pressure on industry sentiment.

Factory output prices, meanwhile, rose to the highest since March 2023, while input costs remained stable in April, but still hovered well above the average from the past two years.

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Export Orders Slide, Jobs Cut as Global Output Struggles

Export-oriented sectors were hit especially hard. New orders declined for the first time since December, while export orders experienced a sharp 2.8-point drop—the steepest fall since March 2022. The export gauge now stands at 47.2, its weakest reading since August 2023.

In response to deteriorating demand conditions, manufacturers have continued to trim their workforce. April marked the ninth straight month of job cuts in the sector, the longest streak of employment contraction since the pandemic.

Several regional purchasing manager index (PMI) reports released last week underscored the widening impact. Asia’s major industrial economies, including South Korea and Taiwan, saw steep declines in factory activity, while Southeast Asian countries such as Thailand, Malaysia, and Indonesia also reported shrinking output. European data released on Friday confirmed continued weakness in the region’s manufacturing sector as well.

Tensions stemming from President Trump’s tariff policies are being felt widely. Tariffs have disrupted trade incentives between the U.S. and China, together responsible for more than 40 per cent of global GDP—resulting in mutual losses. Last Thursday, a report showed that US factory activity contracted at its fastest pace in five months. Just a day earlier, data from China revealed that its manufacturing sector had fallen into its deepest contraction since December 2023.

Amid this economic fog, businesses are hesitant to act. “The on-off-on-off nature of the tariffs is creating huge uncertainty and that is leading to businesses sitting on their hands,” said James Knightley, chief international economist at ING. “They won’t make big decisions until they have some confidence that there won’t be another immediate change in the economic environment.”

This wave of disappointing indicators comes just weeks after finance ministers convened in Washington for the International Monetary Fund’s spring meetings. During the sessions, IMF Managing Director Kristalina Georgieva voiced concern that continued global uncertainty could sharply raise the risk of a recession, following a downward revision in the global growth forecast.

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