Global growth slows in June, remains second strongest in over a year: PMI

Global economic growth slowed in June but remained the second-strongest in just over a year, according to the Purchasing Managers’ Index (PMI), signaling continued solid expansion in the second quarter of 2024 after a slowdown in late 2023. U.S. growth picked up slightly in June amid a broader slowdown in developed economies. Meanwhile, India continued to lead emerging markets by a wide margin.

Global growth became more even in June, with all 25 subsectors covered by the PMI reporting stable or rising output for the first time in three years. Despite signs of a global economic recovery, business expectations for the coming year fell to a seven-month low, partly due to political uncertainty related to elections in India, the UK and France, as well as the upcoming US presidential election.

Global economic growth is cooling

S&P Global Market Intelligence’s PMI survey showed global economic growth rose for an eighth straight month in June. The pace of expansion, however, slowed slightly from May but remained the second-fastest in the past 13 months.

JPMorgan’s headline PMI, which covers manufacturing and services in more than 40 economies, fell to 52.9 in June from 53.7 in May. The June PMI is broadly in line with global growth, which posted an annual rate of 3 percent in June, with an average rate of 3 percent for Q2 2024 as a whole.

Price pressure remains high

Price pressures remained high across the world amid a slowdown in global growth, according to the PMI survey, as cost pressures in manufacturing offset a decline in the services sectors of most major economies. The manufacturing sector remains a challenge in efforts to tame inflation, which remains high compared with central bank targets in many economies.

Data from the global PMI survey, compiled by S&P Global for JP Morgan, revealed that average prices charged for goods and services rose globally at the slowest pace since January, recording the second-weakest monthly increase since October 2020.

The composite PMI Prices Charged Index fell from 53.2 in May to 52.8 in June, but remained above the pre-pandemic decade average of 51.2. However, this month’s data signal a slowdown in inflation in the coming months. Moreover, the latest PMI readings are in line with global CPI inflation of around 3.5 percent, down from the last estimate of 4.5 percent.

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US and India oppose global trends

As global growth signals a recovery, the U.S. defied a slowdown in developed economies, with manufacturing growing at its fastest pace since April 2022. Growth in U.S. services activity hit a 26-month high, offsetting slower manufacturing growth.

Meanwhile, growth in Europe slowed. While output rose in the eurozone for a fourth straight month, the pace of growth slowed sharply as output fell in France and production came to a near standstill in Germany.

In emerging markets, mixed growth trends were evident in June, with India once again leading the four BRIC economies by a wide margin, and growth accelerating from a post-election slump in May to some of its strongest levels in 14 years. Faster growth was seen in both the goods and services sectors.

Meanwhile, economic growth slowed in mainland China but still posted one of the strongest expansions in a year. China’s industrial production rose at its fastest pace in two years, helping to counter a slowdown in services activity.

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