NEW YORK – November saw global manufacturing output expand at the fastest pace since January 2018 and at one of the best growth rates over the past decade, according to JPMorgan.
Demand continued to revive following earlier Covid-19 lockdowns, including a further rebound in international trade flows. There was also a mild increase in employment, as capacity constraints rose, and business optimism hit a near six-year high.
JPMorgan Global Manufacturing PMI – a composite index produced by JP Morgan and IHS Markit, in association with ISM and IFPSM – posted a 33-month high of 53.7, up from 53 in October, remaining above the neutral 50 mark for the fifth successive month.
Manufacturing output expanded for the fifth successive month in November, with growth registered across three sub-industries. The steepest increase was at investment goods producers, where output rose to the greatest extent in almost a decade.
Stronger growth was also registered in the consumer goods category (three-month high), while the rate of increase in the investment goods sector stayed close to October's 33-month record. Greater divergences were evident between the performances of the nations covered by a survey.
Of the 30 territories for which data were available, 19 registered expansions and 11 contractions. Growth was led by strong and accelerated increases in output in China and the US. The upturn in the Euro area slowed, while the downturn in Japan extended into its twenty-third successive month.
The level of incoming new business rose at the quickest pace since January 2018. Alongside improved domestic demand in many nations, there was also a further increase in new export business. New export orders expanded for the third month running and at the joint-highest rate in over two-and-a-half years.
China, Germany, India, the UK, Taiwan, Brazil and South Korea were among the strongest-performing territories in terms of export order growth. The US also saw a slight increase, while Japan registered a further decline. Manufacturing employment rose for the first time in 12 months during November, albeit only marginally. Job growth was seen in China and the US, in contrast to losses in the Euro area and Japan. Higher staffing levels mainly reflected signs the recent manufacturing recovery was testing capacity, such as a further increase in backlogs of work, and improved business confidence, which hit a 69-month record.
November saw input price inflation rise to a two-year high, leading to a further increase in average selling prices at manufacturers. Part of the rise in costs reflected higher demand for raw materials, as purchasing activity expanded for the fourth month in a row. This increased pressure on already stretched supply chains, contributing to the greatest lengthening of average vendor lead times since May.
“Amid alarming virus developments in the US and across Europe, it is encouraging to see the global manufacturing PMI hold up in November,” said Olya Borichevska, global economist at JPMorgan. “The seventh consecutive rise in the output index left the level at 55.2 in November. Internals of the survey were also positive. Regionally the PMIs highlight a split between strength in the US and Asia against weakness across Europe. This aligns with activity restrictions that have been put in place across Europe, which are negatively impacting performance. By contrast, mobility data in the US show very little response to virus developments. Another encouraging aspect of today’s PMI report is the broad-based jolt higher in the future output PMI in November, which might be related to vaccine hopes.”