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Global economic growth gained momentum at the start of the
fourth quarter as disruptions to businesses in many countries eased
in line with a reduction in COVID-19 case numbers. While below the
rate of expansion seen earlier in the year amid the growth spurt
seen as economies opened up from the pandemic, the rate of
expansion nevertheless remains above the long-run average to
indicate a robust expansion.
Not all economies saw improvements, however, with rising case
numbers associated the spread of the Delta variant in the Eurozone
and Russia in particular subduing growth, and virus concerns also
still limiting growth in other economies, most notably China.
Global economic growth accelerated for a second month running in
October. The JPMorgan Global PMI™ (compiled by IHS Markit) rose
from 53.3 in September to 54.5 in October, its highest since July.
Compared with a pre-pandemic long-run average of 53.6, the latest
reading signals above-trend annualised quarterly global GDP growth
of approximately 3.5%.
Reviving service sector drives global growth higher in
October
The PMI was boosted by faster service sector growth, which
picked up sharply to the highest for three months largely in
response to an easing of COVID-19 containment measures in some
countries, in turn linked to lower virus case numbers as the Delta
wave ebbed.
Having risen in September as governments fought the Delta wave.
IHS Markit's COVID-19 Containment Index fell globally in October to
the lowest since the pandemic began. It was a different story in
manufacturing, however, where ongoing pandemic-related bottlenecks
throttled growth to the lowest since the recovery began in July of
last year.
Improving developed market trend
Looking at the major developed markets, output growth gained
momentum in the US and UK thanks in both cases to improved service
sector performances, which counteracted slower manufacturing
growth. Both saw similar strong rates of expansion which hit
three-month highs despite manufacturing recoveries waning to the
weakest for over a year. Japan also saw an improvement in its
performance, with business activity returning to growth for the
first time since April as output revived from recent COVID-19
related disruptions in both manufacturing and services.
The eurozone bucked the improving trend, with growth slowing in
both manufacturing and services during October to result in the
weakest overall expansion since April. Supply constraints limited
growth in both sectors, exacerbated by a renewed rise in virus case
numbers in some parts of the region, notably Germany.
India leads emerging markets
India led the major emerging markets during October, which as a
whole recorded the strongest growth since May. Buoyed by activity
recovering from lockdown measures, India reported the fastest
manufacturing growth since March and the steepest service sector
expansion since April 2011.
In contrast, Russia - facing new lockdown precautions to fight
rising COVID-19 case numbers - saw service sector activity contract
at a rate not seen since last December, offsetting a modest
manufacturing upturn to result in an overall deterioration of
business activity for the second time in the past three months.
China and Brazil meanwhile saw some pick-up in service sector
activity, but in both bases manufacturing output fell, dropping for
the third month running in China and declining for the first time
in six months in Brazil, linked principally to COVID-19 related
bottlenecks.
Chris Williamson, Chief Business Economist, IHS
Markit
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
