The rates of expansion in global manufacturing output and new orders accelerated for the first time in six months in October. At 53.7, up from September's 14-month low, the JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) posted a reading consistent with a solid improvement in overall operating conditions. However, the headline PMI and the indices for output and new orders remained below their respective post-recession averages.
Manufacturing production increased for the 17th consecutive month in October, with the rate of expansion the fastest since June. Growth accelerated sharply in the United States and China, hitting five- and nine-month highs, respectively. Rates of increase also accelerated in the Eurozone, the United Kingdom, India, Turkey, Poland and Denmark. Meanwhile, Japan fell back into contraction, as output decreased for the first time since May 2009. Production also declined in Australia, Brazil, Taiwan and South Korea.
Within the euro area, strong growth was recorded in Germany, France, Italy and Austria during October. Rates of expansion were only slight in Spain, the Netherlands and Ireland, while the recession in Greece deepened.
Global manufacturing new orders rose for the 16th successive month in October. Amongst the largest nations covered by the survey, growth picked up strongly in the U.S. and China and also accelerated (but to lesser extents) in the Eurozone, the U.K. and India. In contrast, new orders to Japanese manufacturers contracted sharply and at the steepest pace for 1.5 years.
October saw new export orders rise for the 16th month in a row, with the rate of growth accelerating to its fastest since July. The U.S. and nearly all of the European nations saw a jump in new export orders, with PMI new export orders indices in most rising by at least two points. Asian economies generally saw new exports decline or, at best, reported only modest growth.
October saw faster job creation in the global manufacturing sector. The rate of increase was sharper than September's six-month low and slightly above the average for the current period of jobs growth (which began in January). Among the largest industrial regions covered by the survey, staffing levels rose in the U.S., the Eurozone, the U.K. and India, were unchanged in Brazil, but fell in China and Japan.
Input price inflation accelerated to a five-month high in October, reflecting increased raw material costs. There were also reports that supply chain pressures, resulting from low stock holdings at suppliers and shortages of certain commodities, were driving costs higher. Input price inflation was steepest in China, the Netherlands and the U.S. Only Japan reported a decrease in purchasing costs.
Commenting on the survey, David Hensley, director of global economics coordination at JPMorgan, said: "The start of Q4 2010 saw the global manufacturing sector break its recent decelerating trend. The global PMI survey indicates that growth of output and new orders improved for the first time since April, while there were further signs of ongoing solid job creation. Although the rates of expansion were below those seen earlier in the recovery, it suggests that the inventory-correction and the consequent drag on manufacturing output are beginning to lose intensity."
