Global Slowdown: Only 3 Nations in Positive Expansion

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The contraction in the global manufacturing sector continued in November. The global manufacturing PMI that I calculate on a GDP-weighted basis for the major economic regions was virtually unmoved at 49.6 from October’s 49.5. The relatively unchanged PMI masks significant changes in the individual countries and regions, though.

The global manufacturing sector was saved by a higher than expected showing in the U.S. as my calculations show the global PMI excluding the U.S. fell from 48.7 in October to 47.8 In November. The ISM Manufacturing PMI surged by 1.9 to 52.7 from 50.8 in October. Outside the U,S., South Africa, Russia, Turkey and India were the only other economies where manufacturing expanded. The contraction in Brazil’s manufacturing sector eased significantly.

The downturn in the Eurozone is gathering pace as the contraction in France and Germany, the two major economies in the region, is deepening. The Markit Eurozone Manufacturing PMI fell to 46.4 in November from 47.1 in October. After Ireland fell back into contraction, the manufacturing sectors of all countries in the Eurozone are now in recession while the contagion widened to emerging European economies. In both China and Japan the expansion ended abruptly. Elsewhere in the Far East the contraction in Taiwan continues and the contraction in South Korea has deepened.

Manufacturing PMIDirectionRate of Change
CountryNov-11Oct-11
U.S.*****52.750.8GrowingFaster
Eurozone*46.447.1ContractingFaster
Germany*47.949.1ContractingFaster
France*47.348.5ContractingFaster
Greece*40.940.5ContractingSlightly slower
Italy*44.043.3ContractingSlight slower
Spain*43.843.9ContractingSlightly faster
Ireland*48.550.1ContractingFrom growing
U.K.*47.647.4ContractingSlightly slower
Japan*49.150.6ContractingFrom growing
Australia*47.847.4ContractingSlightly slower
Emerging Economies
Brazil*48.746.5ContractingSlower
China**49.050.4ContractingFrom growing
China S/A48.350.6ContractingFrom growing
Czech*48.651.7ContractingFrom growing
Poland*49.551.7ContractingFrom growing
Turkey*52.353.3GrowingSlower
India*51.052.0GrowingSlower
Russia*52.650.4GrowingFaster
Taiwan*43.943.7ContractingSlightly slower
RSA***51.650.5GrowingFaster
S Korea47.148.0ContractingFaster
Global****49.649.5ContractingSlightly slower

Sources: Markit*; Li & Fung**; Kagiso***; Plexus Asset Management****; ISM*****

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****

The current state of the global manufacturing sector leaves global central bankers no other choice but to act aggressively to stop the rot. We should expect more announcements in coming weeks regarding lower reserve requirements for banks and interest rate cuts in countries where these cuts can still have a major impact on the economy, especially countries in the BRICS block.

About the Author

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The Plexus Group
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