Global manufacturing conditions continued to meander in November, with strength in Europe and the US offsetting weakness in emerging markets, particularly from Asia.
The J.P. Morgan-Markit global manufacturing PMI gauge fell 0.1 points to 51.2. PMI is a diffusion index that measures changes in activity levels from one month to the next. A reading above 50 indicates activity levels are expanding, so at 51.2 they are expanding fractionally at present.
Over the month Markit reported that new orders (-0.5, 51.5), new export orders (-0.2, 51.0) and employment (-0.1, 50.6) all grew at a slower pace than in October, largely mitigating a 0.4 point bounce in the survey’s output measure, which increased to 52.3. While still indicative of deflationary forces being present, the survey’s subindices on input (+0.3, 48.5) and output prices (+0.1, 48.7) rose fractionally, albeit both held in contractionary territory.
From a regional perspective manufacturing conditions across Europe were robust. The six highest PMI readings all came from the continent, with Denmark, at 61.7, standing head and shoulders above the rest. Of the other other major nations across the region, Italy registered 54.9, Spain 53.1, Germany 52.9 and France 50.6. With the four-largest economies in the eurozone sitting in expansionary territory, the eurozone PMI came in at 52.8, up from 52.3 in October.
While there were pockets of strength elsewhere – manufacturing activity accelerated in Japan and Australia while readings from the US and UK held in expansionary territory despite a slowdown recorded during the month – the news elsewhere was bleak.
Activity levels in China, the world’s largest manufacturer, continued to contract, registering a reading of 48.6 from 48.3 in October, while separate gauges from Taiwan, Vietnam, South Korea, Malaysia and Indonesia all came in below 50. At just 43.8, Brazil’s reading was the lowest of any nation.
Clearly, manufacturing conditions in emerging markets are tough at present, crippled by heavy levels of indebtedness, weak demand, and, in some instances, huge levels of overcapacity.
In the absence of a sharp turnaround from emerging markets in December, Markit suggests that the 2015 average for global output, new orders and new export orders are all likely to be around 1.0-1.5 points below the levels seen in 2014.
For those interested in how each individual nation performed, the chart below compares PMI readings from November compared to October, remembering that PMI surveys are not unilateral in nature nor collated by the same organisation.
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