Global PMI Near a 2.5 Year High

Written by Sandy Williams

Global manufacturing picked up in October with production, new orders and international trade volumes all improving.  The JP Morgan Global Manufacturing PMI rose to 52.1 in October from 51.8 in September. Expansion was seen all regions of the PMI composite except France, India and Greece which were still in the negative growth range below a reading of 50. Cost inflation was at a 1.5 year high although average selling prices increased only modestly. 

Global manufacturing recently has accelerated, as improved inflows of new business underpin a further solid gain in production levels,” said David Hensley, Director of Global Economics Coordination at JPMorgan. “Growth should be maintained heading to year-end as domestic markets are gaining strength in a number of key industrial nations, while the trend in global trade remains supportive.” 


The Eurozone continues to grow modestly in all regions of the EU except France and Greece.  The Markit Eurozone Manufacturing PMI stands at 51.3 for October, unchanged from the flash estimate and up from 51.1 in September.  Ireland and the Netherlands lead the region with PMI’s of 54.9 and 54.4, respectively.  Growth in Italy slowed to a three month low but remained above the 50 mark indicating expansion.  Production and new orders rose for the fourth month and at the second strongest rate in two-and-a-half years.  Exports were also up for the fourth month in a row.  

Chris Williamson, chief economist at Markit, said the rate of growth was somewhat disappointing, however, “a marked turnaround in the health of the manufacturing economy” was indicated by the 2-3 percent expansion now taking place. 

“However, while the recovery goes on, it is by all measures frustratingly slow.  In particular, the modest gains in output and new orders remain insufficient to encourage firms to take on more staff,” said Williamson. “More encouraging indications about the recovery can be gained by looking at the increasingly broad-based nature of the upturn, and especially the fact that increasingly robust gains in production are now being seen in countries such as Spain, Italy and Ireland, to suggest the structural reforms to boost competiveness are starting to pay off.” 


The HSBC China Manufacturing PMI inched up to 50.9 in October from 50.2 in September.  Output was at a six month high due to stronger domestic and foreign demand.  Exports increased at a faster rate in October with demand to the U.S., in particular, increasing. Production costs were up but the rate slowed from September. Inventory increased marginally. HSBC forecasts gradual growth recovery for China. 


Manufacturing activity reached a 41-month high in Japan with the pace of output and new orders accelerating.  The JMMA PMI posted 54.2 in October, up from 52.5 in September.  Export orders picked up on the weakness of the Japanese Yen.  Selling prices remained flat but input prices rose for the tenth consecutive month.  Employment levels were flat for the month. 

South Korea

The Korean PMI rose into the growth range at 50.2 after four months of negative readings, indicating a stabilization of the manufacturing industry.  Export orders were at a 31 month high and output expanded for the first time in five months.  Employment declined somewhat due to cost cutting, resignations and automation of production lines.  Growth is expected to be 2.7 percent in 2013, rising to 3.2 percent in 2014. 


India manufacturing conditions deteriorated for the third month continuing the downward trend seen throughout most of 2013.The HSBC India PMI remaining unchanged at 49.6 and still below the 50 level that indicates growth.  New orders and production fell during the month, however, exports expanded for the first time in three months.  A weaker rupee added to cost inflation with and rising selling prices. 


Domestic demand in Russia put the PMI at 51.8 in October–back in positive territory after three months of negative readings.  Production increased to meet an eight-month high in new orders. Alexander Morozov, chief economist for Russia and CIS at HSBC, warned the fall in new export orders tempers the optimism of good October results.  More information is needed, he said, before the manufacturing sector can be said to finally “bottomed out.” 


Brazil manufacturing edged up slightly in October.  The HSBC PMI posted 50.2, up from 49.9 in September. Production levels increased but new orders were stagnant for the month. Exports declined at the fastest pace since July on lower demand from Europe and the U.S.  A weaker currency pushed average purchase prices higher.  Selling prices also increased in October. 


Manufacturing in Mexico was sluggish in October with only slight growth indicated by a PMI reading of 50.2.  Production was lower than in September despite modest increases in new orders.  Slightly lower employment levels were reported for the first time in 31 months.  Natural disasters and the recent U.S. government shut down affected some production activities in Mexico said Sergio Martin, chief economist at HSBC Mexico.


Canadian manufacturing increased at the fastest pace since April 2011. The RBC PMI posted 55.6 in October from 54.2 in September indicating strong growth in manufacturing activity conditions.  New orders and exports both rose during the month.  Employment continued to rise although at a slightly slower pace than September.


Latest in Economy