Economic crisis: the manufacturing forecast indices plummet to the levels seen with the covid
The forecast indices of the manufacturing sector plummet in several countries, demonstrating that we are on the way to a real recession with a sharp fall in productive activity.
Let's start with Italy : HBOC Italy's manufacturing PMI fell to 43.8 in June 2023 from 45.9 in the previous month and below the market forecast of 45.3.
The reading marked the steepest deterioration in operating conditions since April 2020 , undermined by steep declines in new orders and production, with output contraction the sharpest in three years, while sales fell to lows of eight months. As a result, purchasing activity has shrunk to its lowest level since 2020.
On a positive note, firms have continued to increase employment, even as growth has slipped at a marginal pace. As for prices, input costs recorded the steepest decline since 2009, while production costs continued to decline. Finally, businesses maintained positive prospects, but the degree of optimism moderated to its lowest level in the last six months. Here is the related graph
Even the United States show a negative situation, as far as manufacturing forecast indicators are concerned. The US ISM manufacturing PMI fell to 46 in June 2023, down from 46.9 in May and below forecasts of 47.
The reading showed the fastest pace of contraction in the manufacturing sector since May 2020, with companies managing output downwards as weakness persists and optimism about the second half of 2023 fades. “Demand remains weak , production is slowing down due to lack of work and suppliers have production capacity.
There are signs of further job reduction actions in the near term,” said Timothy Fiore, president of the ISM . In June there were drops in new orders (45.6 against 42.6), in production (46.7 against 51.1), in employment (48.1 against 51.4), in inventories (44 against 45 .8) and in the order backlog (38.7 against 37.5). Furthermore, the pressure on prices eased (41.8 vs 44.2) and the supplier delivery index rose to 45.7 from 43.5, a sign that production lead times have improved again. On the other hand, the customer inventories index fell into “too low” territory (46.2 vs. 51.4), which is positive for future production. Here is the related graph
USA, Italy, but also Germany, are now signaling a strong economic slowdown, indeed we can speak of the expected collapse of manufacturing. This will be the prodrome of the recession first and then of the financial crisis: without turnover who will bear the debts of the production companies which, among other things, have to cope with the increase in interest rates and therefore in financial costs. It will not be an easy moment, the one we will have to face…
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The article Economic crisis: the forecast indices of manufacturing plummet to the levels seen with the covid comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/crisi-economica-gli-indici-previsionali-della-manifattura-precipitano-ai-livelli-visti-con-il-covid/ on Mon, 03 Jul 2023 20:22:38 +0000.