(Ramesh Pathania/Mint)
(Ramesh Pathania/Mint)

With manufacturing contracting, employment is now a global issue

  • For India, the Nikkei-IHS Markit survey showed employment rose every month since April 2018, and rose even in May
  • The global manufacturing employment index edged lower from 50.6 in April to 49.9 in May

Mumbai: Global business activity in the manufacturing sector contracted in May. And, its direct repercussions were felt on employment opportunities across the world.

The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) slipped from 50.4 in April to 49.8 in May. A reading below 50 points to a contraction in manufacturing activity, while a one above 50 indicates an expansion. What’s more, the reading was the lowest since October 2012.

Consequently, companies in the manufacturing sector were less upbeat on their hiring plans. The global manufacturing employment index edged lower from 50.6 in April to 49.9 in May. This is the first reading below the 50-mark since August 2016.

The survey showed that staffing levels were lowered in China, the euro area, the UK, Brazil, Taiwan, South Korea, Mexico, Australia, Russia, Poland, Turkey, Vietnam, the Philippines and the Czech Republic.

The decline in employment levels can be blamed on the ongoing trade conflict between the US and China, which is dampening business sentiment worldwide.

Mumbai: Global business activity in the manufacturing sector contracted in May. And, its direct repercussions were felt on employment opportunities across the world.

The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) slipped from 50.4 in April to 49.8 in May. A reading below 50 points to a contraction in manufacturing activity, while a one above 50 indicates an expansion. What’s more, the reading was the lowest since October 2012.

Consequently, companies in the manufacturing sector were less upbeat on their hiring plans. The global manufacturing employment index edged lower from 50.6 in April to 49.9 in May. This is the first reading below the 50-mark since August 2016.

The survey showed that staffing levels were lowered in China, the euro area, the UK, Brazil, Taiwan, South Korea, Mexico, Australia, Russia, Poland, Turkey, Vietnam, the Philippines and the Czech Republic.

The decline in employment levels can be blamed on the ongoing trade conflict between the US and China, which is dampening business sentiment worldwide.


Besides, companies in the euro zone cited slumping demand in the auto sector, Brexit and the wider geopolitical uncertainty as risks to manufacturing.

Chris Williamson, chief business economist at IHS Markit, said: “Euro area manufacturing remained in contraction during May, suggesting the sector will act as a drag on the wider economy in the second quarter. Companies are tightening their belts, cutting back on spending and hiring. Input buying, inventories and employment are all now in decline as manufacturers worry about being exposed to a further downturn in demand."

According to the JPMorgan survey, part of the reduction in employment reflected a surplus of spare capacity, as highlighted by a further drop in backlogs of work. A fallout of this was the weak pricing power of manufacturers across countries.

As for India, the Nikkei and IHS Markit survey showed that employment has risen every month since April 2018 and continued to rise in May.

However, it should be noted that this private survey does not take into account the large informal economy, which comprises a plethora of small- and medium-scale firms responsible for job creation.

According to some economists, after the implementation of the goods and services tax in July 2017, SMEs have been grappling with increased compliance-related challenges. Besides, the ongoing slowdown in consumption is weighing on their businesses and their ability to create jobs.

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