Operating conditions in the global manufacturing economy improved for the fifth successive month in November. At 53.6, down slightly from October's 39-month high of 54.4, the JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) signaled a solid rate of expansion.
Growth of output and new orders remained broad-based by nation – a positive indication for the sustainability of the upturn. Looking ahead, the cyclically sensitive new orders-to-inventory ratio rose slightly, also suggesting that gains in production would continue in the near term.
Manufacturing production and new orders increased for the sixth and fifth consecutive months respectively in November. The highest output index readings were registered for Taiwan and the United States. In the U.S., growth of production eased from October's high, but the rate of increase in new orders gained momentum.
Asian economies tended to record robust growth of both output and new business, although there were further signs that the rebound in the region was cooling. Growth eased sharply in Japan, while slower rates of expansion were also seen in India, South Korea, Taiwan and Turkey. A noticeable exception was China, which saw steady growth of production and some of its strongest gains in new business in the survey history.
The Eurozone manufacturing sector continued to lag behind the global average in November, despite seeing growth of production and new orders hit 26- and 27-month highs, respectively. This mainly reflected the uneven nature of the rebound in the euro area. While France and Germany are still leading the upturn, this sat in uncomfortable contrast to the ongoing downturn in Spain (which accelerated in November).
Growth of new export orders remained solid in November, led by robust gains in emerging market manufacturing, especially Taiwan and China. The U.S. also registered marked growth.
Manufacturing employment declined for the 20th month in a row in November. Moreover, the rate of job losses accelerated slightly for the first time since hitting a survey record in February. Lower employment was recorded across the majority of the Western manufacturing sectors, a notable exception being the U.S., whereas staffing levels rose in emerging markets.
Higher commodity prices led to a further rise in average purchasing costs in November. Input prices have now risen for four successive months, although the latest increase was slightly less marked than in October. Cost rises were especially marked in China, Russia and Taiwan. The rate of increase in the U.S. slowed sharply. Supply-chain bottlenecks were also a factor contributing to inflationary pressures. Vendor lead-times continued to lengthen at rates last seen in the fourth quarter of 2006.
Commenting on the survey, David Hensley, director of global economics coordination at JPMorgan, said: "The headline PMI fell back slightly in November, but the global new orders and production indexes remained at very elevated levels. National PMIs point to broadly-based manufacturing growth. With final sales rising and inventories falling, the stage is set for continued, strong output growth. Encouragingly, the PMI indicates that the pace of job-shedding is easing although employment growth has yet to resume despite robust output gains."
