Global manufacturing PMI picks up, but still in contraction mode

Global manufacturing PMI picks up in November, but remains below neutral mark

The November manufacturing PMIs published for various developed markets (DMs) and emerging markets (EMs) over the past week resulted in the global manufacturing PMI edging up a bit, to 49.3 (October: 48.8), but remaining below the neutral 50 mark separating expansion from contraction. The improvement was led by EMs, with the EM aggregate index rising to 50.9 (October: 50.1). This was driven by China, with Caixin’s manufacturing PMI for China (included in the index) bouncing back to 50.7 (October: 49.5). That said, the alternative manufacturing PMI for China – the ‘official’ one published by NBS – painted a less rosy picture, dropping a bit further below the neutral mark (to 49.4). Meanwhile, the aggregate index for DMs improved slightly to 47.7 (October: 47.5), but remained clearly in contraction territory, with weakness still concentrated in Europe. Some improvement was visible for countries/regions for which the manufacturing PMIs are still at relatively low levels, such as for the eurozone (up from 43.1 in October to 44.2 in November) – including for Germany and the Netherlands – and for the UK (up from 44.8 to 47.2). Looking ahead, we still think that a sharp rebound in global manufacturing is unlikely given our growth views for the key economies, although we expect some bottoming out in global trade and industry in the course of 2024 (see also here).

Bigger improvement in the supply side

Looking at the various subcomponents of the global manufacturing PMI, the improvement visible in November was mainly concentrated in the supply side. The global output component rose to 49.9 (October: 48.9), also driven by EMs/China. The EM aggregate output index jumped to 51.8 (October: 50.2), whereas the DM index picked up somewhat to 48.0 (October: 47.7), while remaining below the neutral 50 mark. On the demand side, both the global components for new orders and new export orders picked up as well, but more moderately. The global new orders component rose to a six-month high of 48.9 (October: 48.5), while the global sub-index for new export orders rose to a seven-month high of 48.1 (October: 47.5). The fact that supply conditions still look a bit stronger than demand conditions is also consistent with our global supply bottlenecks index, which remains in ‘supply abundance’ territory, although it has moved back a bit towards ‘neutral’ in recent months. Also in line with this picture is the fact that the global subcomponents for input and output prices dropped back somewhat again in November. What is more, these two bellwethers for industrial goods’ price pressures remain well below the peaks seen during 2021 and 2022. This suggests continued subdued pipeline pressures for global goods inflation.