QI TAKEAWAY — We see further downside to global Industrials as the magnitude of fresh Chinese economic disruptions exacerbate the stagflation being sustained across the world’s factory floors.
- Japan, the world’s fourth-largest exporter, saw its headline manufacturing PMI remain positive in April, though warning signs brewed underneath; business confidence fell to an eight-month low and manufacturing production is flat-lining as input prices remain elevated
- Europe’s largest exporter, Germany, also saw its headline manufacturing flash PMI remain above 50 in April; however, at 47.4, the manufacturing output index fell into contraction for the first time since June 2020 with producers citing ebbing demand and continued shortages
- The U.S.’s April flash Mfg PMI, per S&P, hit a 9-month high, but confidence fell to a six-month low; while U.S. pricing power must hold in order to prevent a reversal of fortune, April’s Flash Services PMI, came in at 54.7 vs. the consensus of 58, a three-month low