Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Output growth reported in 18 out of 25 sectors in September,
led by autos & parts markers
Tourism and recreation remain hardest hit
Rising equipment and machinery spending hints at revival in
global business investment spending
IHS Markit's PMI surveys indicated a sustained expansion of the
global economy in September, though trends varied by sector. Output
rose in 18 of the 25 manufacturing and service sub-sectors covered
by the PMIs during September, led by auto makers. Of the seven
deteriorating sectors, tourism and recreation firms remained in the
deepest downturn amid ongoing coronavirus disease 2019 (COVID-19)
containment precautions.
Particularly encouraging was a further improvement in demand for
machinery and equipment and construction materials, hinting at
rising investment spending.
Autos lead upturn, tourism & recreations suffers
amid ongoing restrictions
Auto makers led the upturn as increasing
numbers of factories opened up further production capacity and car
sales revived as showrooms reopened after lockdowns. New orders for
autos and parts showed the largest monthly gain since December 2009
while production surged at a rate not seen since December 2010.
Banking services recorded the second strongest
rate of growth of all sectors, reflecting in part the reviving need
for financial intermediation as economies sprang back into life in
the third quarter. Business activity in the banking sector rose at
the fastest rate since last November.
Healthcare services were consequently pushed
into third place, though continued to perform strongly amid the
ongoing fight against COVID-19, albeit with growth easing from
August's decade-high.
Household & personal use products also
fared well, reflecting rising consumer demand for goods such as
clothing, in turn often linked to the reopening of high streets
around the world. Although output and new orders for household
goods rose at slightly weaker rates than August, the past two
months have seen the steepest rise in demand for such goods for
three years.
Similarly, real estate service providers also
reported above-average growth again in September, as housing market
transactions rose following the lifting of lockdowns. However, the
rate of increase slowed compared to August's near-three-year
high.
By no means all sectors have benefitted from the lifting of
COVID-19 restrictions, however, with tourism &
recreation services in particular still languishing at the
foot of the global rankings, hit once again in September by ongoing
social distancing measures.
More encouragingly, media ؘ- which has been the
second hardest hit sector after tourism & recreation in the
year-to-date ؘ- saw output rise for a third successive month in
September as production resumed at increasing numbers of
companies.
New orders for machinery and equipment show largest gain
since May 2018
Two other sectors that we monitor closely are machinery &
equipment and construction materials production, as these are
useful bellwethers of capital expenditures, with the former a
particularly good indicator of business investment. Encouragingly,
August had seen output of machinery and equipment rise for the
first time since November 2018, with the rate of increase gaining
momentum in September to reach the highest for almost two years.
New orders for machinery and equipment jumped to an extent not seen
since May 2018.
Global construction material production meanwhile rose for a
fourth month, the rate of increase remaining among the highest seen
over the past two years.
Combining the PMI new orders data from the machinery &
equipment and construction materials sectors acts as a useful
leading indicator of global business investment spending. The PMI
data point to a third quarter rise in investment spending after a
steep fall in the second quarter, with spending rebounding by
around 0.5%, representing a modest recovery of some of the
investment decline seen during the pandemic; a small but welcome
positive step.
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.
