Global manufacturing was sputtering at the end of 2015

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Global manufacturing activity ended 2015 with a whimper, dragged down by persistent weakness across emerging markets, particularly in China.

The JP Morgan global manufacturing PMI gauge for December fell 0.3 points to 50.9, marking the slowest pace of expansion seen in three months. Combined with persistent weakness seen throughout the year, the 2015 average was the lowest recorded since 2013.

The global PMI gauge, like all PMI surveys, is a diffusion index that measures changes in activity levels from one month to the next. A reading of 50 is deemed neutral, meaning no change was registered over the month. A sub-50 figure indicates that activity is contracting, while a reading above 50 indicates that activity levels are expanding.

It covers over 10,000 purchasing executives in over 30 countries, accounting for an estimated 89% of global manufacturing output. It’s a substantial survey, and one that potentially provides the best real-time indication on trends in global manufacturing conditions.

Fitting with the headline index, most of the surveys subindices recorded weaker readings in December.

Output fell to 51.7 from 52.3 while new orders and new exports – lead indicators for future levels of activity – both expanded at a slower pace than seen in November.

The full breakdown of the global PMI survey can be found in the table, courtesy of Markit.

As for the performance of individual nations, the chart below tracks the changes in PMI readings seen over the past two months. Those nations with the highest scores, or whose manufacturing sectors are expanding the fastest, are found on the left. The further right you travel, the lower the reading for each nation. Those that fall below the black line have recorded a score below 50, indicating that activity levels are contracting.

As you can see, many emerging nations, including the world’s largest manufacturer China, currently sit in contractionary territory. Amidst tepid global demand and severe overcapacity in many manufacturing industries – particularly in China – activity levels could well deteriorate further before they get better.

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