The global manufacturing industry will remain sluggish in 2024 but is forecast to expand by 0.6% compared with last year. However, it looks set to recover more strongly in 2025, according to the latest data from
Interact Analysis. The market intelligence expert points out that, excluding China, most territories will experience a slight contraction this year, but many will be better off than expected going into 2025.
Although Interact Analysis has lowered growth forecasts for 2025 in its latest
Manufacturing Industry Output Tracker (MIO), this is the result of a slightly improved global outlook for the end of 2024, which will in turn see most economies finish the year in a stronger position. A slight dip in the growth rate is anticipated in 2026, but manufacturing output is expected to maintain a relatively steady positive trajectory out to 2028.
It is still unclear where the global manufacturing recovery will come from and until there is an upturn it is difficult to judge the potential strength. Despite optimistic signs for other territories, the latest MIO includes a slight downward revision for China compared with the previous edition; from 2.8% to 2.4%. China as ‘the factory of the world’ is responsible for almost 50% of the total manufacturing market value and any further reductions in the country’s forecast could well lead to a small contraction in the global MIO figure for 2024.
Consumer resilience coupled with inflation and interest rates slowly starting to fall is pushing up spending worldwide and the US manufacturing economy is strengthening. The semiconductor industry for example has bounced back from a low point in 2023, boosting outlook for parts of South-Asia heavily reliant on the market sector, including Taiwan, Singapore and South Korea. Meanwhile, dwindling order books and the impact of the higher cost of living have constrained global demand, but there are signs of recovery in consumer spending and post-Covid-19 supply chain problems have now eased considerably.
Downward cycleHowever, there are various economic indicators pointing to a more challenging environment for manufacturers. All four major European manufacturing economies are in a downward cycle, and sentiment for the year remains gloomy. Positive signals from the USA may well start to manifest in other regions later in the year, but this has yet to be seen.
Although the overall outlook for manufacturing is expected to improve into 2025, the machinery market is in a slightly worse position. There are variations by machinery type, but underlying factors include persistently high interest rates pushing up the price of new machinery and low order intake in the last year affecting current production figures.
Interact Analysis CEO Adrian Lloyd commented: “The global outlook for manufacturing output is mixed to say the least. Our projections are holding but there are no clear signs of where recovery will come from and how strong it will be. As a result, we will be watching closely to see how constrained consumer spending in China, a strengthening US economy and global events will affect conditions.
“In the latest edition of our MIO tracker, we have added some details about machinery markets and will cover additional machinery sectors in coming editions. The machine tool industry appears to be experiencing more challenging conditions than manufacturing overall, as global uncertainty leads to caution around investment in new equipment.”