Global Manufacturing: Fading tariff boost reveals underlying weakness

The global manufacturing sector slipped back into contraction sentiment, with a Manufacturing PMI falling to 49.7 from 50.4 in June.

• New Orders: Declined for the third time in four months.
• Output: Contracted across consumer, intermediate, and investment goods.
• Employment: Fell for the 12th consecutive month. 
• Inventories: Mild cutbacks continued.
• Prices: Input and output price inflation eased slightly.

This report delves into the latest Manufacturing PMI figures for the major target markets of manufacturing automation and machine vision including the US, EU, China, Japan, South Korea, and India, highlighting significant changes in order income, stock levels, and other critical developments that shaped the sentiment of the manufacturing sector.

Followers of our social media profiles and members of our VisionCrunch community, are already familiar with the economic indicators we use to monitor the manufacturing industry by country. If you are not, please check out this explanation of Manufacturing PMI and year-over-year change in Industrial Output.

Purchasing Managers’ Index™ and PMI® are either trademarks or registered trademarks of S&P Global Inc or licensed to S&P Global Inc and/or its affiliates.

Figure 1 shows the latest readings of the most relevant target economies for industrial automation and machine vision.

United States: Slide to contraction as tariff impacts kick in

• New Orders: Stagnated; export orders fell for the first time in three months.
• Output: Growth softened; only marginal increase.
• Employment: Declined; first net reduction since April.
• Inventories: Reduced as prior tariff-driven stockpiling waned.
• Prices: Input costs rose steeply; selling prices increased markedly.

Eurozone: Stabilisation continues, led by smaller economies

• New Orders: Declined marginally; export demand weakened.
• Output: Fifth month of growth; slowest since March.
• Employment: Job shedding eased to slowest in nearly two years.
• Inventories: Pre- and post-production stocks fell; depletion rates softened.
• Prices: Input and output prices stable.

Germany: Recovery slows as export momentum fades

• New Orders: Growth slowed; export orders up but at reduced pace.
• Output: Fifth straight month of growth; weakest since March.
• Employment: Job losses eased to weakest in nearly two years.
• Inventories: Stocks of purchases and finished goods declined.
• Prices: Input costs fell; factory gate prices dropped at fastest rate in five months.

France: Sharp drop in orders signals renewed fragility

• New Orders: Fell at fastest pace since January; export sales sank.
• Output: Declined marginally.
• Employment: Slight increase; mostly fixed-term hires.
• Inventories: Input stocks and purchasing volumes declined; finished goods rose.
• Prices: Input inflation soft; output charges rose for first time in five months.

Italy: Nearing stabilisation as investment goods shine

• New Orders: Declined slightly; international orders also down.
• Output: Fell marginally; investment goods segment grew.
• Employment: Continued to decline; tenth consecutive month.
• Inventories: Input stocks rose for first time in nearly three years.
• Prices: Input and output prices increased after two months of decline.

Spain: Solid expansion led by new projects

• New Orders: Best increase of 2025; export growth marginal.
• Output: Rose solidly; third month of expansion.
• Employment: Grew for fifth month; strongest since December 2024.
• Inventories: Input stocks and purchasing activity declined.
• Prices: Input and output prices rose modestly; tariffs cited as driver.

Japan: Output contracts again as demand weakens

• New Orders: Continued to decline, though at a slightly slower pace than in June.
• Output: Fell again, with the most pronounced reduction since March.
• Employment: Firms added staff to fill vacancies and in anticipation of stronger demand.
• Inventories: Stocks of both pre- and post-production items fell slightly; purchasing activity declined.
• Prices: Input cost inflation eased to a 4.5-year low, while selling prices rose at the fastest pace in a year.

South Korea: Manufacturing downturn deepens

• New Orders: Fell sharply, extending a four-month period of reduction; export orders also declined.
• Output: Contracted for the fifth consecutive month; the rate of decline accelerated.
• Employment: Reduced further in response to weaker demand and workforce restructuring.
• Inventories: Pre- and post-production inventories lowered as firms exhausted existing stock; buying activity declined.
• Prices: Input cost inflation accelerated due to tariffs and exchange rates; output charges rose modestly.

China: Marginal deterioration as exports drag down demand

• New Orders: Fell slightly after stagnating in previous months; export orders declined solidly.
• Output: Declined for the second time in three months due to weaker demand and inventory reduction.
• Employment: Staffing levels were trimmed modestly in response to lower workloads.
• Inventories: Purchasing activity expanded; stocks of purchases rose fractionally amid expectations of future demand.
• Prices: Input prices rose for the first time in five months due to raw material costs; selling prices were lowered due to competitive pressures.

India: Strongest growth in 16 months, but confidence dips

• New Orders: Rose sharply; fastest pace in nearly five years.
• Output: Accelerated to 15-month high.
• Employment: Hiring slowed; weakest rate since November 2024.
• Inventories: Stocks of purchases rose; finished goods declined.
• Prices: Input and output prices increased; inflation above long-run average.

How to Navigate Times of Global Shifts and Uncertainty

Despite pockets of resilience, particularly in India and Spain, the global manufacturing landscape remains fragile. The combination of tariff disruptions, weak export demand, and cautious investment sentiment suggests that recovery will be uneven and vulnerable to policy shifts. As the global economy progresses, these PMI indicators will remain vital in understanding the ongoing shifts and informing strategic decisions within the manufacturing industry.

If you would like to learn more about

• our perspective on the global target markets of Industrial Automation and Machine Vision, or
• your success factors to survive and grow challenging market environments

please contact us.

Find the latest available readings of Manufacturing PMIs and the Industrial Output of the target countries of Machine Vision here.

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