Global manufacturing expands modestly in October, PMI edges up to 50.8

The global manufacturing upturn extended into October, with both production and new orders rising for the third straight month, according to the JP Morgan Global Manufacturing PMI compiled by S&P Global, ISM, and IFPSM.

The index edged up to 50.8 from 50.7 in September, just below August’s 14-month high of 50.9.

Growth was broad-based across consumer, intermediate, and investment goods, supported by gains in output and new work. The strongest expansions were seen in Asia (excluding China and Japan), where output reached a 14-month high led by India, Thailand, and Vietnam.

“The JP Morgan global manufacturing output PMI rose 0.2-point to 51.5 in October, partially unwinding September’s decline. The index continues to suggest resilience in global industry despite trade war headwinds and a widespread slowing in labour demand,”Maia Crook, global economist at JPMorgan, said in a release.

The US and euro area also recorded faster growth, while the UK returned to expansion after nearly a year of contraction. In contrast, activity slowed in China, and Japan and Brazil posted declines.

New business rose modestly, though global export orders fell for a seventh consecutive month, highlighting ongoing weakness in international trade. Job creation remained subdued, with employment levels unchanged overall. While hiring increased in China, the US, Japan, and India, it fell in the euro area, the UK, and Brazil.

Business sentiment softened to a six-month low as confidence waned across all sub-sectors. The ratio of new orders to inventories remained neutral, reflecting cautious inventory management. Both finished goods and input stocks rose slightly.

Input costs increased for the 27th consecutive month, though inflation eased to a five-month low. Price pressures were led by the investment goods sector, where cost inflation accelerated. Manufacturers passed on some of these higher costs, with selling prices rising at a similar pace.

“Forward-looking indicators, however, were more downbeat: while the new orders index ticked up 0.1-point, the future output PMI fell back 1.3-point, suggesting a still-cautious outlook from producers even as current output holds up. On a national level, a large step up in the US output PMI contrasted with an equally large fall in China, as well as still-lackluster PMI levels in the Euro area and Japan," Crook added.