Global manufacturing stagnates in October

The JP Morgan global manufacturing PMI (Purchasing Managers Index) saw little change at 50.0 in October, from 49.8 in September (see Ti Dashboard – Manufacturing PMI). The slight increase was a result of an improvement in new orders, although the index for which still remained low.

The manufacturing PMI measures the level of activity in the manufacturing sector. It is calculated based on a number of sub-indicators including: new orders from customers, production level, employment and inventories. An index value of 42 indicates that the overall economy is expanding and an index value of 50 indicates that manufacturing is expanding.

Within the euro area, production fell in all of the nations covered except Ireland. A decline was also signalled in the UK for the second time in the past three months. Growth strengthened in China, Russia and India. A modest expansion in output was reported by Japan, following September’s decline.

Underlying the lacklustre performance of global manufacturing was a reduced inflow of new business. The level of new work received contracted for the third month running in October, although the rate of decline eased over the month. The reduction was largely centred on the European economies, with the euro area and the UK seeing new business drop to the greatest extents in around two-and-a-half years.

In contrast, the US and China saw new business increase for the first times in four and three months respectively, while Canada reported further solid new order growth. The east European economies of Russia, Poland and the Czech Republic also saw new business increase, as did South Africa, India and Turkey.

Among the largest manufacturing nations, new export orders stagnated in the US, and fell in Japan, the Eurozone (steepest in 28 months), the UK, India, South Korea, Taiwan and Brazil. China reported a modest increase, as did Russia.

October saw average input prices decline for the first time since July 2009. Costs fell in the US, the Eurozone, Taiwan, Switzerland and the Czech Republic. The steepest rate of decrease was seen in the US, where costs fell for the first time since May 2009 and to the greatest degree in two-and-a-half years.

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The global manufacturing PMI edged up to the breakeven 50 mark in October. The new orders index was responsible for the increase, although it remains very depressed, whereas the coincident activity indexes of output and employment were little changed. Although US inventory conditions appear good, national surveys registered a potential excess in the growth of finished goods inventory in Asia."

Quelle: eyefortransport

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