Global factory activity remained in a slump for the second straight month during July 2023.

The J.P. Morgan Global Manufacturing Purchasing Managers’ Index (PMI) ­— a monthly indicator of worldwide factory activity — came in at 48.7 for the second consecutive month, matching the index’s lowest level since June 2020. A reading below 50 signifies a contraction in activity, according to Reuters. 

An index covering Europe showed regional activity shrank in July at the fastest pace since the COVID-19 Pandemic. Germany — Europe’s biggest economy — experienced considerable weakness while France and Italy also saw their factory activities diminish.

Asia was hit hard as well after Japan, Taiwan, Vietnam and South Korea all saw manufacturing rates contract in July. China also suffered after the S&P’s Global Manufacturing PMI for the country fell to 49.2 in July from 50.5 in June, falling short of analyst estimates and marking the nation’s first decline since April.

"Manufacturing PMIs remained in contractionary territory across most of emerging Asia in July, and the underlying data points to further weakness ahead," said Shivaan Tandon, emerging Asia economist at Capital Economics, an independent economic research firm based in London. "Falling new orders, bleak employment prospects and high inventory levels point to subdued factory activity in the coming months."

North and South America experienced more stability than the rest of the world after Mexico reached a seven-year high during July in terms of activity following increased outputs and more new orders. Though U.S. manufacturing appeared to stabilize, factory employment in the country fell to a three-year low. Canada’s PMI reading came in at 49.6 thanks to growing output rates. And even though Brazilian factory activity contracted for a ninth consecutive month, the country registered a PMI of 47.8, its highest score since February 2023.