Global manufacturing outlook mixed.
Global Manufacturing Faces Headwinds: Turkey's PMI Contracts, Americas' Growth Uneven Amid Geopolitical Risks
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Key Points
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June saw Turkey’s PMI drop to 47.1, extending 27 consecutive months of contraction, with new export orders returning to contraction after a brief May expansion and ongoing logistical headwinds as war-related disruption persisted; lead times lengthened but at the slowest pace since February, while input-cost inflation cooled to its lowest since November.
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In June, the US ISM manufacturing PMI eased to 53.3 from May’s 54.0, with the prices-paid index plunging to 73.0 from 82.1—the largest monthly drop since July 2022—indicating easing input costs even as deliveries lengthened (supplier deliveries index at 57.4) and employment remained under 50 (49.7).
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The May US ISM reading was 54.0—the strongest since May 2022—with broad strength in new orders (56.8) and production (54.3), while exports rose to a 15-month high (50.6) and prices paid held at a high level but declined modestly to 82.1; other details show inventories near 50 and backlogs at 52.2, underscoring resilient activity despite tariff/energy-cost pressures.
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Canada’s May PMI stood at 52.9, signaling ongoing expansion for a fifth month, with input costs and selling prices at the highest levels since July 2022 as supply chains contended with Middle East–related frictions and the sharpest supplier lead-time increases since October 2022, alongside a notable employment pickup—the strongest since October 2024.
Turkey's manufacturing sector took a sharp step back in June, with its PMI falling to 47.1 from 49.8 in May — extending a brutal 27-month contraction streak, according to S&P Global. Andrew Harker, Economics Director at S&P Global Market Intelligence, said the sector went backward, citing "anecdotal evidence that the war in the Middle East continued to be the principal cause of the challenges facing firms."
The same day, the US ISM Manufacturing PMI slipped to 53.3 from May's 54.0, ISM reported. That is still above 50 — the line between growth and contraction — but it signals a cooling after months of momentum. The global picture is one of stark divergence: North America holds its ground while Turkey sinks deeper.
Turkey's June Collapse Ends a Brief Recovery
May had offered a rare glimmer of hope for Turkish manufacturers. The PMI touched 49.8 — the highest reading in two years — as exports briefly bounced back. But June's 47.1 reading crushed that optimism. New export orders returned to contraction after that one-month reprieve, S&P Global noted.
Only 2 of 10 monitored sectors expanded in June — Chemicals/Plastics and Vehicles. Food products posted their sharpest output drop since mid-2025, raising concerns about domestic food prices, according to the Istanbul Chamber of Industry. One bright spot: input cost inflation cooled to its lowest level since November 2025, offering some relief to squeezed manufacturers.
War in the Middle East Drives the Pain
The Iran conflict sits at the heart of Turkey's troubles. On February 28, US and Israeli forces struck Iranian infrastructure, triggering widespread "Force Majeure" declarations and restricting transit through the Strait of Hormuz, according to Resilinc. Turkey's PMI hit a cycle low of 45.7 in April before the brief May bounce. The Strait carries 20% of the world's petroleum and 25% of seaborne oil.
Shipping giant Maersk's Chief Commercial Officer Karsten Kildahl said the company is focused on "supporting flows in and out of the Gulf region" despite major corridor disruptions. Rerouting around the Strait adds 4 to 6 weeks to delivery times and structurally raises costs, according to analysis from Oliver Wyman. Those extra costs hit Turkey especially hard given its geographic proximity to the conflict.
US Manufacturing Cools but Stays in Growth Territory
The US ISM PMI dipped to 53.3 in June but remained in expansion for the sixth straight month, TradingView reported. The biggest move was in the Prices Paid index, which plunged 9.1 points to 73.0 — the largest single-month drop since July 2022. ISM survey chair Susan Spence noted the US economy is in its 20th month of expansion, even as prices ease.
Still, not everything is rosy. The employment index stayed below 50, at 49.7, marking contraction for the 33rd time in 41 months. Supplier delivery times also lengthened, with the deliveries index at 57.4. May's reading of 54.0 — the strongest since May 2022 — included a 15-month high in exports at 50.6 and solid new orders at 56.8, per ISM.
Canada's Growth May Be Built on Fear, Not Demand
Canada's May PMI came in at 52.9, marking five straight months of expansion. But S&P Global's Paul Smith warned the growth may be "somewhat illusory." Customers are stockpiling goods out of fear of future price hikes and shortages — not because demand is organically strong, according to Dow Jones.
Input costs and selling prices hit their highest levels since July 2022 as Middle East–linked shipping delays caused the sharpest supplier lead-time increases since October 2022. On the upside, Canadian manufacturers added jobs at the fastest pace since October 2024. For now, North America keeps expanding — but the foundation underneath that growth is shakier than the headline numbers suggest.
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