<p>The global manufacturing industry in 2025 did not follow the script of &#34;trade conflict = industrial recession.&#34; JPMorgan Chase breaks down the resilience of this year into several clues: <strong>Global industrial production (IP) has rebounded after the slump of 2022-2024, and during the most intense phase of trade friction, the goods sector outperformed the service sector.</strong></p>
<p>According to news from the Wind Trading Desk, Joseph Lupton from JPMorgan Chase's global economic research team stated in a report on the 24th that the industrial performance in 2025 &#34;has broken the historical close relationship with GDP.&#34; This is also the &#34;anomaly&#34; that the entire report aims to explain: why growth did not collapse, inventory did not drag, and it is not just technology that is supporting it.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e92ae9ee-5d8f-4980-94ff-34a63318a5f6.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e92ae9ee-5d8f-4980-94ff-34a63318a5f6.png"/></p>
<p><strong>They attribute the answer to three variables:</strong> First, the demand side is dominated by capital expenditure (especially equipment investment); second, the AI boom has indeed boosted technological output, but more critically, the non-tech sector has returned to positive growth after two consecutive years of contraction; third, inventory has shifted from &#34;dragging&#34; to &#34;lean,&#34; leaving room for subsequent growth.</p>
<p>Looking ahead, the report's judgment is not overly aggressive: under the circumstances of stable terminal demand, low inventory, and the potential for demand to continue to spread, global industrial output may still achieve an annualized growth rate of 2%-3% in the coming months. However, the risks are also &#34;two-way&#34;—the return of technology to a more sustainable pace and the stagnation of the labor market constraining retail may push growth back down; judicial changes related to tariffs are considered unlikely to alter the main line of the &#34;trade conflict&#34; in the U.S.</p>
<h2>The 2.4% in 2025 did not come all at once: a strong first quarter, but no &#34;hangover&#34; in the second half</h2>
<p>The report sets the tone for 2025 with one number: global industrial output is expected to grow by 2.4% on a 4Q/4Q basis. Of this, 1.6 percentage points occurred between February and March, translating to an annualized 9.4%. <strong>The report tends to link this to the early production and procurement triggered by concerns over global trade conflicts.</strong></p>
<p>What is even more noteworthy is that JPMorgan Chase originally expected this &#34;short-term stimulus&#34; to lead to stagnation in the second half of 2025, but the opposite occurred: the growth rate did slow down, but still maintained an annualized growth of 1.7%. The report attributes part of this &#34;not collapsing&#34; explanation to changes in inventory rhythm— the pace of inventory decline gradually slowed in 2025, providing a bottom support for output.</p>
<h2>AI is a clear line, but 2025 looks more like &#34;non-tech resumption&#34;: from -0.8% to +1.2%</h2>
<p>The strength of the tech sector is beyond doubt. The report states that: excluding China, <strong>global tech output is expected to grow by 9.1% year-on-year in 2025, higher than the 4.7% in 2024, driven by enthusiasm for AI and capital expenditure from hyperscalers.</strong>
However, the research report emphasizes: Technology has been strong for several years, but it alone cannot explain the shift from &#34;2022-2024 sluggishness&#34; to &#34;re-acceleration&#34; in 2025. The more critical variable is that non-tech output has returned to positive growth—globally (excluding China), non-tech output is expected to grow by 1.2% year-on-year in 2025, compared to -0.8% in the previous two years. This is not a high prosperity reading, but the change in direction is enough to reshape the judgment on whether &#34;the industrial cycle is spreading.&#34;</p>
<h2>Developed markets are not turning around thanks to automobiles: After a jump in the first quarter, the US and Europe are flat, with a structure more like &#34;multi-point recovery.&#34;</h2>
<p>Regionally, the report believes that the awakening of manufacturing in developed economies (DM) is a main line for 2025: DM manufacturing is expected to shrink by 1.4% in 2024, then return to a year-on-year growth of 1.4% in 2025. The most significant improvements are seen in the United States and the Eurozone: over the two years ending in the fourth quarter of 2024, manufacturing output in the US and Europe shrank at annualized rates of -0.9% and -2.9%, respectively; while in 2025, the US and Eurozone are expected to achieve growth of 1.7% and 1.8%, respectively.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/51a4bf66-c282-4d35-9567-d8fd1c680e12.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/51a4bf66-c282-4d35-9567-d8fd1c680e12.png"/></p>
<p>The report does not shy away from the reality that &#34;growth is concentrated in the first quarter and then tends to flatten,&#34; but also emphasizes: <strong>The market's previous concerns about &#34;front-loading and subsequent retraction&#34; have not materialized.</strong></p>
<p>At the industry level, automobiles are not the engine of this round of recovery. The report mentions that the performance of automobiles in developed markets is relatively stagnant, with US automobiles still being a clear weak point (related to the impact of trade conflicts). However, the scope of recovery is broader than just &#34;technology + pharmaceuticals&#34;: In addition to technology and pharmaceuticals, the US has also seen improvements in aerospace and machinery; the Eurozone's key industries such as machinery and automobiles have also rebounded from weakness in 2024. According to the report's statistical criteria, 14 out of 20 major manufacturing IP categories in the US are expected to improve in 2025 compared to 2024, while in the Eurozone, 9 out of 11 are expected to improve.</p>
<h2>Emerging markets: Overall not bad, but &#34;Asia strong = technology strong,&#34; and strength is uneven.</h2>
<p>The report's judgment on emerging markets (EM) leans more towards &#34;steady with differentiation&#34;: <strong>EM commodity production is still expected to grow by 3.8% year-on-year (slowing from 4.6% in 2024), with recent strength mainly driven by Asia, and Asia's strength is highly concentrated in technology.</strong></p>
<p><strong><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/934de446-9bb5-4a32-8a6e-757385a08970.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/934de446-9bb5-4a32-8a6e-757385a08970.png"/></strong></p>
<p>Among the economies listed in the report, Singapore (+25%) stands out with a significant increase in technology output, with a higher proportion of technology in manufacturing; Singapore also experienced disruptions from pre-production in pharmaceuticals at the end of the year. Conversely, in regions where technology-driven growth is weak and non-tech weights are larger, 2025 does not look &#34;bright,&#34; with manufacturing output in South Korea and Thailand even contracting on a 4Q/4Q basis, which the report links to the drag from trade conflicts</p>
<h2>Demand Side Focus on Capital Expenditure: Equipment Investment Lifts Non-Tech, but Structure Still Has Blind Spots</h2>
<p>The research report views &#34;the uplift of terminal demand&#34; as the foundation for industrial rebound, <strong>with capital expenditure (capex) being the most eye-catching. Global business equipment investment is expected to grow by 6.5% year-on-year in Q3 2025, the fastest in three years</strong>; their capex nowcaster shows an annualized growth of about 4.4% for Q4, tracking a monthly rhythm of about 6% annualized entering the current quarter.</p>
<p><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c2b832cc-2906-40a4-a18c-ffe253d332fe.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/c2b832cc-2906-40a4-a18c-ffe253d332fe.png"/></p>
<p>One easily overlooked point is that the upturn in equipment investment is not only happening in the United States. The tracking metrics provided in the report show that global equipment investment growth, excluding the United States and China, has risen from 3.6% in 2024 to 5.9% annualized in the first three quarters of 2025.</p>
<p>However, the report also acknowledges insufficient visibility: it is difficult to determine whether the rebound in non-tech output is more due to non-tech capex outside the United States or changes in inventory of non-tech products. At least in the United States, the acceleration of capex in 2025 is mainly driven by technology items, while other categories are more differentiated; however, by the end of the year, there have been signs of a more &#34;non-tech&#34; improvement in durable goods orders and shipments, which is seen as an early signal of demand diffusion.</p>
<h2>Inventory Shift from &#34;Drag&#34; to &#34;Lean&#34;: Upside Risks Arise Here</h2>
<p>Inventory is referred to as the &#34;interpreter&#34; repeatedly in the report. At the beginning of 2025, terminal demand (especially capex) surged, initially outpacing output, indicating a slowdown in inventory growth; subsequently, output quickly caught up, and by mid-year, the contribution of inventory to manufacturing growth turned slightly positive. The report believes that by the end of 2025, the drag from inventory will basically dissipate, and there is even reason to believe that inventory levels are lean.</p>
<p>This is also one of the reasons they are doing &#34;two-way&#34; pricing for future risks: <strong>if demand maintains its current level, the lean inventory may force additional restocking, thereby providing industrial output with upward elasticity beyond demand itself.</strong></p>
<p><strong><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d456a32e-9dac-44a2-8ee8-389363167715.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/d456a32e-9dac-44a2-8ee8-389363167715.png"/></strong></p>
<h2>Changes in Tariff Jurisprudence &#34;Have Little Impact&#34;: The Main Line of Trade Conflict Remains</h2>
<p>The report mentions the latest developments regarding the U.S. Supreme Court overturning IEEPA tariffs, which superficially seems favorable, but JP Morgan's conclusion is: <strong>this is more like a constraint on the policy toolbox rather than a shift in trade stance.</strong> The reason is that the government subsequently announced a 15% Section 122 tariff and set multiple exemptions, which collectively have limited impact on the effective tariff rate and the progress of the &#34;trade conflict&#34; in the U.S., making it difficult to disrupt the recovering business confidence</p>
<h2>The Next Few Months: A Window of 2%-3% Annual Growth and Risks on Both Ends of &#34;Technology and Employment&#34;</h2>
<p>Under the combination of &#34;lean inventory + decent end demand + demand potentially spreading from technology to non-technology,&#34; <strong>the research report predicts that global industrial output may still achieve an annual growth of 2%-3% in the coming months.</strong></p>
<p>However, they also clearly outline two downward risks: first, the slowdown of technological growth to a more sustainable level, and second, stagnation in the labor market suppressing retail and consumer goods demand. The baseline assumption of the report is that corporate cautious sentiment fades and hiring rebounds, allowing consumption to take over as a more &#34;income-driven&#34; expansion; if this step cannot be achieved, the structural anomaly of &#34;industry outperforming services&#34; seen in 2025 may also converge again.</p>
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<p>In 2025, the global manufacturing sector shows resilience. JP Morgan points out that global industrial output is rebounding after a period of stagnation, with the goods sector performing better than the services sector amid trade frictions. The research report analyzes capital expenditures on the demand side, the AI boom, and the recovery of non-tech sectors, predicting that global industrial output will maintain an annualized growth rate of 2%-3% in the coming months. Despite facing risks from the return of technology to a sustainable pace and stagnation in the labor market, global industrial output is expected to grow by 2.4% in 2025</p>

- In 2025, global manufacturing defied expectations of decline, with significant recovery in industrial output after previous stagnation.  
- Morgan Stanley's analysis identified key factors including increased capital expenditure and an AI-driven boost in technology production, alongside a return to growth in non-tech sectors.  
- Looking ahead, a stable demand environment and low inventories may support continued annualized growth rates of 2% to 3%, despite potential risks from evolving technology trends and a stagnant labor market.

A Unique Rebound in Global Industry in 2025