140 Comments 2024-09-13

Global Manufacturing PMI Stays Below 50% for 6 Months

In September 2024, the global manufacturing PMI was 48.8%, slightly decreasing by 0.1 percentage points from the previous month, and has been hovering around 49% for three consecutive months. China Economic Network noted that this marks the sixth consecutive month the global manufacturing PMI has been below 50%. From April to August of this year, the global manufacturing PMI分别为49.9%, 49.8%, 49.5%, 48.9%, and 48.9%.

By region, the Asian manufacturing PMI ended its two-month downward trend, slightly increasing from the previous month, and remained above 50%; the African manufacturing PMI rose from the previous month, reaching above 50%; the American manufacturing PMI slightly increased from the previous month but remained below 50%; the European manufacturing PMI decreased from the previous month and continued to be below 50%.

The China Federation of Logistics and Purchasing analyzed that, considering the comprehensive index changes, the global manufacturing recovery condition slightly declined compared to the previous month, and the overall recovery strength still needs to be improved. Driven by the positive recovery of China's economy, Asian manufacturing continues to be the stabilizer for the global economic recovery. The recovery strength of African manufacturing has improved, but its stability still needs to be observed. American and European manufacturing have not changed their weak operation trends.

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The China Federation of Logistics and Purchasing further pointed out that as the monetary policies of the world's major countries tend to be more accommodating and inflationary pressures ease, the upward momentum for economic recovery is accumulating, and the forecasts of the world's major institutions are also becoming more optimistic. Recently, the latest report released by the Organization for Economic Cooperation and Development raised the economic growth forecast for 2024 from 3.1% to 3.2%, and believes that the global economy is in a stage of stabilization. The World Trade Organization's "Goods Trade Barometer" shows that the global goods trade prosperity index is 103, higher than the benchmark of 100. Looking forward to the fourth quarter, there is still room and reason for the monetary policies of the world's major countries to continue to be accommodative, and fiscal policies are also expected to continue to exert force, and the global economy is expected to recover favorably. A more open and balanced global cooperation environment is an important guarantee for the global economy to accelerate the pace of recovery.

European manufacturing is weak and declining, and the PMI has decreased. In September 2024, the European manufacturing PMI was 47.3%, decreasing by 0.7 percentage points from the previous month, falling below 48%. Looking at the main countries, the UK manufacturing PMI decreased from the previous month but remained above 51%; the Spanish manufacturing PMI significantly increased from the previous month to 53%; the French manufacturing PMI slightly increased from the previous month but remained below 45%; the manufacturing PMI of Germany and Italy both decreased by more than 1 percentage point from the previous month, both below 50%, with Germany's manufacturing PMI approaching 40%.

Looking at the trend of the European manufacturing PMI, the foundation of the European economic recovery is not solid, and there are still downward risks. The European economy still faces the dual pressures of geopolitical conflicts and insufficient demand within the region. The economic sentiment index in the eurozone in September was 96.2, lower than the previous month's 96.6. European Central Bank President Lagarde believes that the European economic recovery is facing resistance. To ease the downward pressure on the economy, the European Central Bank has cut interest rates twice in a row this year. In October, there is still a high probability that the European Central Bank will continue to cut interest rates. Looking at inflationary pressures, in September, the eurozone CPI decreased by 0.1 percentage points month-on-month, and the CPI year-on-year was 1.8%, also lower than the previous month's 2.2%, falling below the European Central Bank's 2% target, indicating that the inflationary pressures in the eurozone have eased, providing support for the European Central Bank to continue cutting interest rates.

American manufacturing has not changed its weak operation, and the PMI has slightly increased. In September 2024, the American manufacturing PMI was 47.8%, although it increased by 0.2 percentage points from the previous month, it has been below 48% for three consecutive months, indicating that the weak operation trend of American manufacturing has not changed. The main country data shows that the manufacturing PMI of Brazil and Canada increased to varying degrees from the previous month, both above 50%; the US manufacturing remained unchanged from the previous month, continuing to be below 50%; the Mexican manufacturing PMI decreased from the previous month, continuing to be below 50%.

The ISM report shows that in September, the US manufacturing PMI was 47.2%, unchanged from the previous month, and has been below 48% for three consecutive months. The changes in the sub-indices show that the manufacturing production index and the new order index both increased to varying degrees from the previous month, but both remained below 50%, indicating that the downward pressure on the supply and demand of US manufacturing has eased compared to the previous month, but the weak trend has not changed.The U.S. manufacturing sector continues to operate weakly, indicating that the risk of an economic recession in the United States has not been completely eliminated even after the Federal Reserve decided to start lowering interest rates. Recently, the Bloomberg Economics Institute predicted that there is a high probability of 70% that the U.S. economy has already or is about to fall into a recession. U.S. consumer confidence has also shown signs of weakening. Data recently released by the Conference Board shows that the U.S. Consumer Confidence Index for September fell by 6.9 points to 98.7, marking the largest decline since August 2021. Against this backdrop, the necessity for the Federal Reserve to continue lowering interest rates to stimulate the economy becomes even more prominent. Recent inflation-related data also supports the Federal Reserve's continued interest rate cuts. The U.S. Personal Consumption Expenditure Price Index for August has slowed down to 2.2%, the lowest level since March 2021. In September, the increase in the U.S. non-farm employment data did not change the market's expectation for the Federal Reserve to continue lowering interest rates, but there was an adjustment in the expected magnitude. The U.S. seasonally adjusted non-farm employment increased by 254,000 people in September, exceeding the market's expectation of 150,000 people and the revised 159,000 people from the previous month. Based on the data changes, Bank of America adjusted its expectation for the Federal Reserve's interest rate cut in November from 50 basis points to 25 basis points.

African manufacturing recovers faster than the previous month, with the PMI rising above 50%.

In September 2024, the African manufacturing PMI was 50.3%, an increase of 1.9 percentage points from the previous month. Looking at the main countries, the rapid recovery of South African manufacturing is the main factor affecting the faster recovery of African manufacturing compared to the previous month. The South African manufacturing PMI rose from around 43% last month to over 52%; Nigeria's manufacturing PMI fluctuated little and remained slightly below 50% for two consecutive months; Egypt's manufacturing decreased compared to the previous month, falling below 50%.

Although African manufacturing has recovered faster than the previous month, looking at the monthly trend changes of the PMI, it often fluctuates around 50%, which means that the stability of African manufacturing recovery still needs to be observed. The potential of the African economy needs to be tapped by increasing basic investment in a relatively stable political environment to achieve sustainable industrial development. The construction of the African Continental Free Trade Area, promoted by the African Union, is accelerating, enhancing the competitiveness of African manufacturing through economies of scale and strengthened regional cooperation. At the same time, artificial intelligence and the digital economy are gradually becoming important support areas for African countries to promote economic development.

Asian manufacturing continues to stabilize, with a slight increase in PMI.

In September 2024, the Asian manufacturing PMI was 50.7%, ending the continuous two-month decline and slightly increasing by 0.1 percentage points from the previous month, remaining above 50% for nine consecutive months. Looking at the main countries, China's manufacturing PMI was 49.8%, an increase of 0.7 percentage points from the previous month; India's manufacturing PMI decreased compared to the previous month but remained above 56%; among the main ASEAN countries, the Philippines' manufacturing PMI increased significantly compared to the previous month, rising above 53%; Thailand's manufacturing PMI decreased compared to the previous month but remained above 50%; Indonesia, Singapore, Malaysia, and Vietnam's manufacturing PMIs each rose and fell compared to the previous month, but all remained below 50%; Japan and South Korea's manufacturing PMIs both decreased to varying degrees compared to the previous month and both remained below 50%.

The China Federation of Logistics and Purchasing stated that looking at the index changes, driven by the positive recovery of China's manufacturing industry, the Asian manufacturing PMI continues to maintain stable growth. With the continuous fermentation of China's fiscal and monetary policy effects, in the fourth quarter, China's economic recovery momentum will continue to strengthen, and it is expected to drive the continued enhancement of Asia's economic recovery momentum. The Asian Development Bank recently released a report, believing that Asian developing economies maintained the vitality of economic growth in the first half of 2024 and raised the economic growth forecast for developing economies in the Asia-Pacific region in 2024, expecting that developing economies in the Asia-Pacific region will grow by 5.0% in 2024, an increase of 0.1 percentage points from the 4.9% forecasted in April. At the same time, it is expected that the inflation rate of developing economies in the Asia-Pacific region is expected to further slow down to 2.8%, 0.4 percentage points lower than the previously expected 3.2%.