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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 PMI | Direction | Rate of Change | ||
| Country | Nov-11 | Oct-11 | ||
| U.S.***** | 52.7 | 50.8 | Growing | Faster |
| Eurozone* | 46.4 | 47.1 | Contracting | Faster |
| Germany* | 47.9 | 49.1 | Contracting | Faster |
| France* | 47.3 | 48.5 | Contracting | Faster |
| Greece* | 40.9 | 40.5 | Contracting | Slightly slower |
| Italy* | 44.0 | 43.3 | Contracting | Slight slower |
| Spain* | 43.8 | 43.9 | Contracting | Slightly faster |
| Ireland* | 48.5 | 50.1 | Contracting | From growing |
| U.K.* | 47.6 | 47.4 | Contracting | Slightly slower |
| Japan* | 49.1 | 50.6 | Contracting | From growing |
| Australia* | 47.8 | 47.4 | Contracting | Slightly slower |
| Emerging Economies | ||||
| Brazil* | 48.7 | 46.5 | Contracting | Slower |
| China** | 49.0 | 50.4 | Contracting | From growing |
| China S/A | 48.3 | 50.6 | Contracting | From growing |
| Czech* | 48.6 | 51.7 | Contracting | From growing |
| Poland* | 49.5 | 51.7 | Contracting | From growing |
| Turkey* | 52.3 | 53.3 | Growing | Slower |
| India* | 51.0 | 52.0 | Growing | Slower |
| Russia* | 52.6 | 50.4 | Growing | Faster |
| Taiwan* | 43.9 | 43.7 | Contracting | Slightly slower |
| RSA*** | 51.6 | 50.5 | Growing | Faster |
| S Korea | 47.1 | 48.0 | Contracting | Faster |
| Global**** | 49.6 | 49.5 | Contracting | Slightly 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.
