Global manufacturing PMI remains in contractionary territory at end of 2023

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The global manufacturing sector continued to see contractionary conditions in the last month of 2023 as intakes of new business shrunk further, driving production to decline for the seventh consecutive month. 

The latest JP Morgan Global Manufacturing PMI, a composite index produced by JP Morgan and S&P Global in association with ISM and IFPSM, posted a 49.0 rating in December, signalling a slight decline from November’s 49.3. 

The latest result marks the 16th consecutive month the index has remained below the neutral 50.0 mark. This is a reflection of a sharper fall in manufacturing production in December, with the latest decline centred on the intermediate goods sector.

“The global manufacturing output PMI slipped 0.4-point in December, and ends 2023 in modest contraction territory. Last month’s decline was broadly based across economies. Output slipped in Europe after a promising rise in November, and the US took a step downwards,” said Maia Crook, global economist at JP Morgan

Both producers of consumer and investment goods saw expansions in December but overall output decreased 13 times in the past 17 months. 

The global manufacturing PMI report revealed declines in output in all except seven of the 29 countries for which December readings were available. 

Meanwhile, growth has been registered in China, Colombia, Greece, Indonesia, Mexico, the Philippines, and Russia. 

Output in the US manufacturing sector declined for the first time in four months, while Japan posted in seventh successive month of contraction. 

The euro area remained the main source of weakness as production across the currency bloc fell for the ninth month running, with especially severe downturns in Germany, France, Austria, and the Netherlands. 

Similar contractions were also in the United Kingdom, Poland, and Czechia. 

Job losses also plagued the global manufacturing industry for the fourth consecutive month, with significant cuts seen in China, the euro area, the US, and the UK, among others. Meanwhile, staffing levels stagnated in Japan. 

Price inflationary pressures continued to climb as the year closed. Although rates of increase in both input costs and output charges remained relatively mild, they nonetheless accelerated slightly over the month.