Fynsa
Global PMI (Purchasing Managers Index) surveys have been on an overall downward trend, sending a signal of weakening underlying growth momentum. Moreover, in recent months, the global PMI has been consolidating in contractionary territory (below 50 points) with similar declines of around 1 point in both manufacturing and services output readings for the month of November. The relief is coming from prices, although this may partially reflect the decline in demand, as evidenced by the continued fall in the new orders PMI.
At 48.0, the global production PMI is consistent with a very soft 1.4% growth in global GDP. The sharp loss of momentum in the PMI surveys since mid-year is particularly worrisome, as the global new orders PMI is falling as sharply as the production reading. In addition, the resilience in employment readings evidenced in recent months is fading rapidly.
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Widespread deterioration across all sectors is a striking feature of recent PMI performance.. With signs of inventory accumulation and falling orders, a correction in manufacturing output was expected after the goods sector surged at the start of the expansion. In fact, the global manufacturing PMI points to a 1.4% annualized contraction in global industrial production, according to JP Morgan estimates.
In contrast, the even larger drop in the services sector PMI is surprising and signals a worrisome loss of momentum in the post-pandemic global economic recovery. The services index is down nearly 6 points since February, when a fading of pandemic headwinds was widely expected to promote a more complete recovery in the services sector.
Encouragingly, broader inflationary pressures continued to ease in November. The indices remain elevated, but the steady series of declines is a sign that inflation is losing momentum. Now, the drop in inflation measures carries a cautionary note: the fall in the input and output price PMI could be as much (or more) a sign of weakening demand as it is of improving supply.
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At the national level, the results were largely pessimistic. The U.S. all-industry PMI declined 1.9 points to 46.4 in November and is now the most depressed in level terms among the G4 economies. Japan's all-industry PMI fell 2.9 points to 48.9. The UK all-industry PMI moved sideways at 48.2 on the month. Europe's PMI rose marginally by 0.5 points to 47.8. In emerging markets, China's PMI fell 1.3 points to 47.0, although some recovery is expected as the reopening process picks up steam. Of note was the 1.4 point rise in India, which has been the best performing emerging market economy.
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