G4 flash PMI Data for May confirm that the incipient recovery in global production has dipped or even rolled over in the past couple of months. Manufacturing output expectations have likewise dipped from high levels in Europe (Figures 1,2). Japan is the partial exception, but METI projections suggest flattish output growth over the Aril/May period (Figure 3).
Meanwhile, March was a (very) weak month for industrial production in the EU and China, with small increases in the US and Japan. For the G-10 as a whole, output fell by 0.3% versus the average of 0.1% down over the previous 5 months
By contrast, new orders for the service sector remain at a high level (Figures 4, 7-11). Consumers continue to spend freely on travel, eating out and entertainment/sports. Auto demand is holding up albeit with some slowing of EV sales in recent months, but spending on tech hardware and housing related goods remains weak. Overall, the divergence between service new business and manufacturing new orders is now at the highest level since the GFC (Figures 5,6).
On the inflation front, goods price inflation is already back near pre-COVID norms, but price pressures in services are coming down more slowly (Figures 12,13).
