Global manufacturing downturn in October marks longest deterioration sequence since 2002 – JP Morgan

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The global manufacturing industry continued to see contractionary conditions in October as output declined for the fifth consecutive month dragged by further deterioration in new orders. 

The J.P. Morgan Global Manufacturing PMI posted a three-month low rating of 48.8 at the start of 2023’s last quarter, down from 49.2 in September and below the neutral 50.0 mark for the 14th consecutive month. 

This is the longest deterioration sequence since the downturn registered between December 2000 and February 2002, according to the latest composite index produced by J.P. Morgan and S&P Global. 

Europe remains in the lead of global factory output decline in October, with the eight fastest contracting manufacturing nations located on the continent: Germany, France, the Netherlands, Poland, Czechia, Austria, the United Kingdom, and Italy. 

Asia saw a slight dip in production volumes, as strong growth in India and modest expansions in Indonesia and Thailand were more than offset by contractions in mainland China and Japan. 

The US eked out a second consecutive mild increase in output volumes. 

Data broken down by sector signalled that the deterioration was confined to the intermediate and investment goods industries as both saw output contract during October. 

Meanwhile, consumer goods production rose at the quickest pace in five months. 

Employment declined for the second month running and to the greatest extent since August 2020. Input cost inflation accelerated in October, taking the rate of increase to a seven-month high. 

“The downturn in new orders also extended to 16 months, a survey-record sequence of decline. This is leading to increased caution among manufacturers, with jobs, inventories and purchasing all cutback, while business optimism slumped to its weakest in almost a year. While Europe is still the main drag on world factory output, continued weakness in larger Asian manufacturers such as Japan and mainland China are also causes for concern,” said Bennett Parrish, global economist at J.P. Morgan