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Global Manufacturing Shows Uneven Recovery as U.S. Surges and China Slows

Rising energy and shipping costs from the Middle East conflict threaten expansion that is driven more by clearing backlogs than by fresh demand.

Steel components lie at as steel manufacturing factory in Mendota, Illinois, U.S., February 21, 2025. REUTERS/Vincent Alban
The assembly line and new electric Mercedes-Benz C models are seen during the opening of the expanded factory in Kecskemet, Hungary, July 13, 2026. REUTERS/Marton Monus
Salesmen fold shirts inside a clothes store at a market in Mumbai, India, March 3, 2016. Growth in India's services industry slowed sharply in February as rising prices lead to a slight deceleration in demand, a business survey showed on Thursday. REUTERS/Danish Siddiqui
Factory workers operate machine presses at Abipa Canada in Boisbriand, Quebec, Canada May 10, 2023. REUTERS/Evan Buhler

Overview

  • U.S. factories led the gains, with the ISM manufacturing PMI rising to 55.6 on Monday, the strongest reading since May 2022, lifted by rising new orders and a rebound in factory hiring.
  • Eurozone output climbed to a multi‑year high with the S&P Global headline PMI near 51.9, but producers said the rise reflected work through backlogs rather than a clear pickup in new orders.
  • China’s manufacturing momentum weakened in July as S&P’s private RatingDog PMI fell to 50.9 and an official survey showed factory activity slipping into contraction, prompting officials to speed up planned fiscal infrastructure spending.
  • India’s HSBC/S&P PMI eased to 53.5 in July, the slowest pace since August 2021, with new-order growth and hiring cooling even as export demand provided some support.
  • Surveys point to persistent risks: firms have been rebuilding inventories and facing longer supplier lead times and higher energy costs, a combination that could lift factory‑gate inflation, squeeze household budgets, and leave growth fragile if fresh demand does not strengthen.