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With August seeing a rise in COVID-19 case numbers globally due
to the spread of the Delta variant, it was no surprise to see
healthcare lead the PMI growth rankings and hospitality slump.
Similarly, growing pandemic related shortages have increasingly hit
many manufacturing sectors, such as autos and construction
materials, with spill-overs to some service sectors such as IT
services. Price pressures are most concentrated in those sectors
reporting the greatest constraints.
IHS Markit's global PMI data, based on information collected
directly from over 28,000 companies around the world, showed the
pace of global economic growth slipping in August to the lowest
since January. The slowdown occurred alongside a further wave
of COVID-19 infections as the more contagious Delta variant spread
across increasing numbers of countries, notably in Asia but also in
the US and parts of Europe.
Output under pressure from COVID spread
Output consequently fell in China as well as a number of other
smaller Asia-Pacific economies, and growth slowed in the US and
Europe. Service sector output growth dropped worldwide to the
lowest since February, led by the first fall in global services
exports since March, and manufacturing grew at the lowest rate
since the sector's recovery began in July of last year.
Global healthcare booms as hospitality
slumps
Looking deeper into the PMI data by detailed sector, the
strongest expansion in August was recorded in healthcare services,
reflecting the resurgence of the pandemic. Growth of business
activity in this sector was among the highest ever recorded by the
survey, albeit below prior peaks seen during the pandemic.
Growth also surged higher in the pharmaceuticals & biotech
sector, resulting in the joint-third-fastest overall healthcare
industry growth seen since data were first available in 2009.
In contrast, growth deteriorated to the greatest extent in the
tourism & recreation sector, as many economies reimposed
COVID-19 restrictions and concerns over the spread of the virus
dampened demand for travel and other hospitality activities.
Supply issues hit manufacturing
Steep slowdowns were also seen in many manufacturing sectors,
most notably autos production and construction materials, linked in
many cases to supply shortages curbing production capacity.
Of the 26 detailed sectors covered by the global PMI, falling
output was in fact seen in five sectors, four of which were
manufacturing oriented and a fifth - IT software and services - saw
activity fall in part due to a lack of tech equipment.
The constraints on production caused by a lack of inputs were
further highlighted by certain sectors seeing output lag new orders
growth. Autos and construction materials manufacturing, for
example, reported that output had fallen short of new orders to the
greatest extent of the sectors covered, followed bv software &
services and industrial goods manufacturing.
Shortages drive prices higher
Price hikes were most prevalent in sectors reporting the
greatest constraints and shortages relative to demand. The steepest
rise in average selling prices globally in August was therefore
recorded in the chemicals (including plastics) sector, followed
closely by timber and paper producers.
Only banking services reported lower selling prices in
August.
Chris Williamson, Chief Business Economist, IHS
Markit
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
