Global manufacturing PMI slipped to a 14-month low in September

Growth of the global manufacturing economy moderated again in September. At 52.5, down further from April's near six-year high, the JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) fell to a 14-month low. Rates of expansion eased for production, new orders, new export orders and employment.

Manufacturing output rose for the 16th month in a row in September, but at the slowest pace since June 2009. Although production continued to rise across the major industrial regions covered by the survey, rates of expansion were generally slower than in August. Growth eased in the United States and Japan (both to 15-month lows), the Eurozone (weakest in 11 months) and the United Kingdom (slowest in a year).

In contrast, China reported a slightly faster pace of increase than in August. Within the euro area, France saw the sharpest growth and was the only Eurozone nation to record a quicker rate of increase. Growth in Germany remained marked, but eased sharply to an 11-month low.

September saw global manufacturing new orders rise for the 15th successive month, although the rate of expansion was only modest and the weakest during that period. Global trade flows also slowed, as manufacturing new export orders rose at the weakest pace since July 2009.

Growth of new work eased closer to stagnation in the U.S. and was the weakest for a year in the euro area. Japan saw new work decline for the second month in a row. China and the U.K. both reported stronger new order growth, although rates of increase were well below those seen in the first half of 2010.

Jobs were added in the global manufacturing sector for the ninth successive month in September. The rate of increase was modest and slightly below the average for this period. Staffing levels were raised in the U.S., the Eurozone, China and the U.K., but fell in Japan, India and Australia. Within the euro area, jobs growth was centered on Germany, the Netherlands and Austria, while the French manufacturing labor market moved closer to stabilizing.

The combination of increased employment and slower growth in new orders led to a slight decline in backlogs of work in September. The reduction in outstanding business was the first in 13 months.

Cost inflation picked up for the second month running in September. However, the rate of increase was well below those seen earlier in the year. Part of the increase reflected supply chain pressures, as highlighted by a further marked lengthening in average vendor lead times.

Commenting on the survey, David Hensley, director of global economics coordination at JPMorgan, said: "The September PMI fell to its lowest level in 14 months, following slower growth in production, new orders and employment. The PMI is likely to fall further in coming months, based on the continued slide in the ratio of new orders to inventory. As a result, production is likely to stop growing or even contract in the next few months on a transitory basis."