Global Manufacturing Index Up on Rebounds in U.S., Parts of Europe

While failing to excite or impress, the global manufacturing sector did show a small increase in October, according to the latest data released by JPMorgan Chase & Co. and economic research firm Markit.

The JPMorgan Global Manufacturing PMI rose to 51.4 from September’s 50.7. The index showed increases in output, new orders, new exports and employment; and the latter two exited contraction territory (sub-50). The United Kingdom posted the most notable individual performance, reaching a 16-month high. The United States was also near the top of the hot performers list, reaching its highest level in six months in the Markit U.S. Manufacturing PMI at 53.1--Perhaps not surprisingly, Mexico appeared to enjoy an echo-effect and rose by its biggest margin in five months. Given the obvious importance of U.S. conditions on the global stage, the news is seen by analysts as quite encouraging.

“Export growth has revived, suggesting firms are managing to adapt to the stronger dollar,” said Chris Williamson, Markit chief economist. “With the Fed eagerly watching the data flow to see whether the third quarter economic slowdown will intensify, the improvement in the manufacturing sector increases the odds of policymakers voting to hike rates at the FOMC’s December meeting.”

In Europe, the Markit Eurozone Manufacturing PMI for October of 52.3 exceeded, albeit narrowly, the October Flash estimate and September’s performance. A three-month high-water mark in Italy (54.1) , a two-month best in the Netherlands (53.7) and a 20-month record in Austria (53) helped temper sliding index levels in Germany (three-month low) and Spain (22-month low). “The eurozone manufacturing recovery remains disappointingly insipid,” said Williamson. “There were some bright spots in the survey, however, with export orders showing the largest monthly gain in four months, which may help allay fears that weaker growth in China and other emerging markets is derailing the eurzone’s recovery.” Eastern Europe, much of which is not tracked in the PMI for the eurozone, also demonstrated impressive growth in October, especially Poland and the Czech Republic, according to JPMorgan and Markit.

However, slowdowns continue to steal the headlines in nations like Taiwan, South Korean, Indonesia, Malaysia, Turkey and all-important China. The silver linings within China’s inability to escape contraction territory with a 48.3 in the Caixin China General Manufacturing PMI for October are that mild improvement was reported between September and October and the pace of deterioration in operating conditions has slowed to a four-month low.

- Brian Shappell, CBA, CICP, NACM managing editor

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