Global manufacturing activity contracts for 4th consecutive month
Output stabilises but new orders continue to decline.
The global manufacturing sector continued to contract in October, posting a purchasing managers index (PMI) of 49.4 and remaining below the neutral 50.0 mark for the fourth straight month, according to a survey by JP Morgan and S&P Global Market Intelligence.
Out of the five PMI components, three signalled contraction at the start of the last quarter: new orders, employment, and stocks of purchases. Output broadly stabilised at September’s level, whilst stressed supply chains led to a further lengthening of supplier delivery times.
The increase in the PMI level indicated a deceleration in the rate of contraction from September’s previous nadir. This moderation reflected an improvement in operating conditions in China, whilst downturns in the US and the euro area both eased. India, Spain, and Brazil topped the PMI growth rankings, whilst Austria, Germany, and France were at the bottom.
Sectoral data showed declining operating conditions in the intermediate and investment goods industries, though the rates of contraction eased in both cases. The consumer goods category recorded expansion, with the rate of growth reaching a four-month high.
New business intakes contracted again in October, marking the fourth consecutive month of decline. Decreases in both the intermediate and investment goods industries outweighed growth in the consumer goods category.
The trend in international trade volumes also weakened, with new export orders decreasing for the fifth consecutive month. China, the US, the euro area, Japan, and the UK were amongst the larger industrial regions reporting a decline in international demand.
The recent mediocre performance of the global manufacturing sector contributed to subdued business optimism in October.
Sentiment remained close to September’s 22-month low. Job losses were recorded for the third consecutive month, with the rate of decline the steepest since August 2020. Reductions occurred in China, the US, and the euro area, while Canada, the UK, India, and Brazil registered job growth.
The rate of input price inflation held steady at September’s six-month low in October. Average output charges increased only slightly during the latest survey period, as an acceleration in emerging markets offset a deceleration in developed nations. That said, rates of increase in both price measures remained stronger in developed nations compared to emerging markets. October also saw average supplier delivery times lengthen for the fifth consecutive month, reaching their greatest extent since December 2022.
