Monthly PMI Bulletin: December 2022

The following is an extract from S&P Global Market Intelligence's latest Monthly PMI Bulletin. For the full report, please click on the 'Download Full Report' link.

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The global slowdown accelerated midway into the final quarter of the year with both manufacturing and services output deepening in contraction. Demand conditions further deteriorated, though supporting the easing of supply constraints and price pressures. Overall, business confidence remained muted.

The J.P.Morgan Global Composite Output Index - produced by S&P Global - posted 48.0 in November, down from 49.0 in October. This marked the fourth consecutive month of global contraction and at the fastest pace since June 2020.

At the root of the global slowdown had been the weakening of demand conditions, weighed down by challenges from rising prices, low confidence, higher interest rates and COVID-19 impact, such as in mainland China. Furthermore, the S&P Global Sector PMI data also showed widespread deterioration in business activity whereby only four of the 21 categories tracked exhibited expansion in output from the previous month. National PMI data further highlighted business activity shrinking in major developed economies, with a steep deterioration in the US, outlining the extent of the current downturn.

That said, the easing of demand should not come as a surprise with central banks around the world having instituted a series of tightening measures to rein in inflation. The latest findings from the November PMI data should be music to their ears. Globally, supply constraints further eased with manufacturing supply delays improving while price pressures have also cooled as a whole, albeit still relatively elevated by historical standards. The issue, however, is that further policy moves may not be congruent with the early signals flashed by the data, and hence lead to a more protracted downturn in the coming year.

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Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.