Monthly PMI Bulletin: October 2023

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 economic expansion continued to decelerate at the end of the third quarter, slipping to the slowest in eight months. Worse may be to come, as global new orders shrank for the first time since January and backlogs of work fell sharply, signalling further weakness in the coming months.

The J.P.Morgan Global PMI Composite Output Index - produced by S&P Global - posted 50.5 in September, down from 50.6 in August. This was the second consecutive month in which global growth remained largely stalled after losing momentum earlier in the year. The current reading is broadly consistent with annualized quarterly global GDP growth of just under 1%, which is below the long-run average of 3.0%.

The goods producing sector remained the weaker performer between manufacturing and services in September, with goods production in contraction for a fourth straight month, albeit only marginally. Better supply conditions supported producers in clearing their backlogged work, but a lack of new orders meant that overall production continued to deteriorate. Moreover, weakness in global trade coupled with ongoing inventory reduction policies persisted as key drags on factory output, offering little reprieve for the manufacturing sector in the near term.

Although the service sector stayed in expansion, the rate of growth sank to the weakest since January. To a large extent, this continued to be driven by a fading of the post-pandemic travel tailwind, though weaker performances were also visible across various other service sectors.

Despite cooling demand conditions, selling prices measured across both goods and services ticked higher in September, in part due to higher oil prices. Stubbornly elevated global price pressures, attributed primarily to service sector inflation, meant that global CPI could remain historically-elevated into the new year. Again, we will be watching how persistent the 'stickiness' of inflation may be with the next round of flash October PMIs from October 24.

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Purchasing Managers' Index™ (PMI^®) data are compiled by S&P Global 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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