Operating conditions at global copper users improved fractionally during June, as sales rose for the first time in seven months off the back of reduced selling prices.
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Output expanded marginally but employment continued to fall and input purchases increased as cost burdens remained relatively modest.
The seasonally adjusted Global Copper Users Purchasing Managers Index (PMI) – a composite indicator designed to give an accurate overview of operating conditions at manufacturers identified as heavy users of copper – rose from 49.4 in May to 50.1 in June, moving above the 50.0 mark that separates growth from contraction.
It marked the first improvement in operating conditions at global copper users since November 2018.
Key to the improvement was an increase in output at copper users in June.
Although marginal, the rate of expansion was the fastest seen since last September.
Driving output growth at the regional level was a stronger increase at US copper users, which respondents linked to higher sales during the month.
Meanwhile, Asian users reported greater activity for the first time in nine months, as demand also grew.
By contrast, European users continued to see a decline.
Adjusted for seasonal factors, the New Orders Index moved into expansion territory during June, signalling a marginal increase in demand at global copper users.
This was mainly driven by domestic sales, as external demand fell further albeit at the softest pace since last October.
Notably, US copper users saw the sharpest rise in total new orders for 13 months.
Concurrently, Asian users noted the first increase in demand in 2019 so far.
Higher sales led global copper-using firms to purchase larger volumes of inputs in June.
Nevertheless, firms still had to use up additional stocks during the month, with inventories of purchased goods dropping for the ninth month in a row.
Lead times were broadly unchanged from May.
At the same time, workforce numbers fell for the third consecutive month.
Despite stronger hiring activity at some firms, others continued to reduce employment.
The overall drop was fractional though.
Input price inflation remained relatively subdued in June, despite rising from the previous month.
As such, copper users decided to lower their selling prices for the second month running, as firms reportedly looked to drive up sales amid high competition.
The rate of decline was marginal though, and softer than that recorded in May. ■