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Global PMI signals modest easing of manufacturing downturn in
September
Global exports fall at second-fastest rate since October
2012
Job cuts continue as sentiment holds at survey low
Germany leads downturn
Global manufacturing activity contracted marginally for a fifth
successive month in September, according to the
latest PMI surveys from IHS Markit, though the rate of decline
moderated very slightly for a second consecutive month. The number
of countries in decline also eased to a four-month low. But more
worrying was a gloomy reading on firms' expectations about the year
ahead and a further cut in factory headcounts.
Fifth month of deterioration
The JPMorgan Global Manufacturing PMI, compiled
by IHS Markit from its proprietary business surveys in 30 markets,
rose marginally from 49.5 in August to 49.7 in September, but
remained below the 50.0 no-change level to signal a fifth straight
month of deteriorating business conditions. The current downturn is
the longest and deepest since 2012.
Although output was broadly stable for a second month, inflows
of new orders fell for a fifth consecutive month, albeit dropping
only marginally and less than that seen in the prior three months.
A relatively steep decline was however seen for global export
orders, which fell at the second-fastest rate since October 2012,
with worldwide trade flows having now fallen for twelve straight
months. That said, the latest decline in exports was slightly
weaker than seen in August.
The paucity of new orders meant backlogs of work continued to
decline, in turn leading to a fifth month of modest net job losses
in the manufacturing sector as firms often sought to reduce excess
capacity.
The lack of demand, combined with widespread uncertainty about
the outlook and ongoing geopolitical concerns, also meant
producers' expectations about their output in the year ahead
remained firmly stuck at the record seven-year low seen in
August.
The survey data indicate that sentiment - as measured by future
expectations - has fallen further over the past year than the
survey gauges of actual output and new orders, hinting that
manufacturing sector growth will continue to weaken in coming
months unless the business environment starts to improve.
Limited pricing power
Higher oil prices contributed to an increased rate of inflation
for manufacturers' input costs, though the rate of increase
remained only very modest and well below the strong gains seen this
time last year.
Average selling prices were meanwhile unchanged as stiff
competition restricted firms' scope for passing higher costs onto
customers.
The weak price gauges in September rounded off a third quarter
in which both costs and selling prices showed the weakest average
readings since the first quarter of 2016.
Germany leads global downturn, Greece enjoys strongest
upturn
In addition to the headline PMI showing some signs of
improvement, the number of countries (or markets) reporting
manufacturing downturns (as given by a PMI below 50) eased from 17
to 14 (down further from 19 in July), falling to the lowest since
May and now running at just under half of all countries surveyed.
However, two other countries stagnated, and several others were
close to stalling.
Germany again reported the steepest contraction of all
countries, its PMI hitting the lowest since June 2009 and dragging
the eurozone PMI to its lowest since October 2012. Other notable
countries in decline included Japan, the United Kingdom, Russia,
Mexico, Italy, Spain, Malaysia, South Korea and Indonesia.
A return to growth was seen in Canada while Turkey and Taiwan
stabilised.
At the other end of the spectrum, the fastest expansion
continued to be recorded in Greece, again followed by Brazil,
Myanmar and the Philippines. Notably, China moved up into sixth
place in the rankings while the United States moved up into eighth
position, with both seeing improved rates of expansion. While the
IHS-Markit compiled Caixin PMI for mainland China's PMI climbed to
a 19-month high, a five-month high was seen for the US PMI.
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.
