Global manufacturing PMI slightly lower in March

Global manufacturing PMI weakens somewhat in March

After rising by two consecutive months in early 2023, the global manufacturing PMI dropped back by 0.3 point in March, to 49.6 (February: 49.9), still quite close to the neutral 50 mark separating expansion from contraction. While the improvement seen in February was driven by emerging markets (EMs) on the back of China’s reopening, so was the downward correction in March. The aggregate index for EMs fell by almost a full point to 50.7 (February: 51.6). although remaining above the neutral 50 mark separating expansion from contraction. Caixin’s manufacturing PMI for China (included in the EM aggregate) fell by more than 1.5 points in March, returning to the neutral 50 mark. It should be noted, however, that China’s official manufacturing PMI also dropped, but remained relatively high at 51.9. Although China’s industrial sectors also profit from the domestic reopening rebound, although clearly not as much as the services sectors, they continue to face headwinds from the slowdown in developed markets (see our recent update on China’s PMIs here). Meanwhile, the aggregate index for developed markets (DMs) edged up a bit in March, to 48.4 (Jan/Feb: 48.1), although remaining in contraction mode.

Delivery times have normalised and price pressures ease

Looking at the various subcomponents of the global manufacturing PMI, the most eyecatching development is the sharp rise in the delivery times subindex for DMs. After having fallen to record lows in 2021 – indicating long delivery times which were illustrative for bottlenecks in global supply chains at the time – this indicator has normalised rapidly since last year, and rose to a 14-year high of 55.3 in March. This reflects an easing of global supply bottlenecks coupled with a cooling of global demand, with for instance the global manufacturing PMI’s exports subindex remaining clearly below the neutral 50 mark (March: 47.7). Our global supply bottlenecks index has also fallen deeper into ‘abundant supply’ territory, with for instance also the global benchmark for container tariffs having lost almost 85% since their September 2021 peak. The unwinding of supply-demand imbalances – coupled with corrections in commodity markets – is also visible in the global manufacturing PMI’s subindices for cost-push inflation. Both the output price and input price component fell by around two full points in March. The broad commodity index has fallen by around 15% since its peak reached in April 2022, just after the Russian intervention in Ukraine.