The global manufacturing expansion lost momentum in June as the rush to stockpile goods ahead of expected supply disruptions and price rises began to wane. Purchasing managers’ indices fell in the United States, the United Kingdom, the eurozone and Taiwan, while readings in Brazil, France and Germany edged back into expansion territory only marginally. The broad deceleration, captured in surveys compiled before a US-Iran ceasefire memorandum was signed on 17 June, suggests that the war-driven boost to factory output is fading even as actual production in several economies held up on the back of existing order books.

Viewed from Washington, the two main gauges of factory activity told a consistent story. The ISM index dropped to 53.3 from 54.0, and the S&P Global PMI fell to 53.9 from 55.1, with new orders and production softening. Firms reported that the front-loading of purchases to hedge against Middle East disruptions had run its course. In London, the UK PMI slipped to 52.5 from 53.9, though output hit a 21-month high as manufacturers worked through accumulated orders. Frankfurt-based analysts noted a similar pattern: the eurozone PMI eased to 51.4, a four-month low, even as the production sub-index rose to a two-month high. Germany’s reading inched up to 50.3, while France returned to marginal expansion at 51.2, but both continued to report falling or only tentatively rising new work.

The divergence was sharpest in Asia and Latin America. Taipei-based researchers recorded a ninth straight month of expansion, with the PMI at 60.7, powered by insatiable global demand for artificial-intelligence supply chains. In Bogotá, Colombia’s manufacturing PMI jumped to 53.7, lifted by new orders and a post-election confidence boost. Brazil’s index crept back above 50 to 50.8, though production and new orders remained in contraction, and firms built precautionary inventories at the fastest pace in nearly five years. Across all regions, supply-chain strains persisted but showed tentative signs of easing, with supplier delivery times lengthening less dramatically than in previous months.

Inflationary pressures, while still elevated, cooled from the peaks of May. The ISM’s prices-paid index tumbled from 82.1 to 73.0, and input-cost inflation in the eurozone slowed to its weakest since March, reflecting the sharp drop in oil prices as ceasefire talks progressed. Yet employment trends diverged: US factories shed jobs at the fastest rate outside the pandemic since 2009, and German manufacturers cut headcount for the third consecutive year, while Brazil and Colombia added workers modestly. Business confidence remained subdued in most advanced economies, with UK and US firms citing geopolitical uncertainty and policy risks.

The next factual milestone is the implementation of the US-Iran ceasefire and its effect on energy costs and shipping routes. Central banks in Frankfurt, Washington and London will scrutinise incoming price and activity data ahead of their next policy meetings, with markets already pricing in further rate rises to counter sticky inflation.