Global manufacturing marks steepest decline in nearly two years

Business optimism falls to a 22-month low.

The JP Morgan Global Manufacturing PMI—a composite index produced by J.P. Morgan and S&P Global Market Intelligence in association with ISM and IFPSM—declined to 48.8 in September, indicating a deterioration in overall operating conditions for the third straight month.

Although the decline remained modest, it was the fastest rate of contraction in almost a year, since October 2023.

Four of the five PMI components indicated levels consistent with contraction in September, as new orders, employment, and stocks of purchases all fell.

The only positive contribution to the headline PMI came from the inverted suppliers' delivery times index.

For the first time this year, manufacturing production decreased as companies scaled back output in response to reduced orders. The contraction was the steepest since December 2022. Additionally, the trend in international trade remained weak, with the contraction in new export orders hitting an 11-month high.

Amongst the major economies, the eurozone saw the steepest fall in production, led by Germany. Output also slipped deeper into contraction in the US, whilst Japan recorded a marginal decline. In mainland China, production barely grew, stagnating for a third consecutive month, while the rest of Asia saw a reduced rate of expansion.

India, Brazil, Spain, and the UK were amongst the fastest-growing larger nations covered by the survey.

"A fourth straight decline in the global manufacturing output PMI points to a weakening in the global industry. The 0.6 pt move down in September lowered the output index to a nine-month low of 49.4, marking its first reading below the 50-mark this year. Underlying details were also weak: the new orders, employment, and future output PMIs all saw sizable September declines," said JP Morgan global economist Bennett Parish.

"At the national level, a depressed Euro area output PMI points to a very weak industrial sector while China looks to be stagnating. Even the US output PMI, which stood out with a modest step up in its earlier flash estimate saw this improvement wiped away in today's final release," he added.