The global manufacturing sector ended 2010 on a strong footing, Rates of growth in production and new orders accelerated, leading to a further solid increase in employment. At a six-month high of 55.0 in December, the JPMorgan Global Manufacturing PMI (Purchasing Managers' Index) pointed to a robust improvement in overall operating conditions.
The PMI has remained above the 50.0 nochange mark throughout the past one-and-a-half years. The average reading for the PMI in Q4 2010 was above that in Q3 but below the six-year high reached in the second quarter.
Manufacturing production increased for the nineteenth month running in December, with the pace of expansion the fastest since June. Moreover, the average rate of growth during 2010 as a whole was the quickest since 2004 and the second-sharpest since the series began in 1998. The expansion in output remained broad-based by nation, with only Japan and Greece reporting contractions. Growth accelerated sharply in the US and the Eurozone, while also remaining strong in China.
Growth of new orders also picked up in December. Although the rate of increase hit a seven-month peak, it was well below those generally seen at the start of the year. Incoming new work has now risen for 18 consecutive months. Higher levels of new business were seen in the US, the Eurozone and China, while Japan and Greece were the only nations to report reductions.
International trade volumes continued to improve in December, as highlighted by an increase in new export orders for the eighteenth successive month. However, the rate of growth eased slightly to a three-month low and remained below the average for the current sequence of increase.
December saw global manufacturing employment rise for the twelfth month in a row. Amongst the major industrial regions covered by the survey, job creation was seen in the US, the Eurozone (including a survey record rate of increase in Germany) and China. In contrast, Japan saw a modest reduction in staffing levels for the fifth month running.
Average input prices rose at the second-fastest pace since April's 20-month peak in December. Higher costs reflected increased prices for cotton, food products, fuel, metals and timber. All of the countries for which data were available reported an increase in purchase prices. The sharpest rates of inflation were seen in Taiwan, Denmark, Russia, the Eurozone, the US and China. Part of the increase in input costs reflected ongoing supply chain pressures. This was highlighted by a further marked lengthening in average vendor lead times.
Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "December saw the PMI indexes for output and new orders push further away from their recent lows. This acceleration towards year-end suggests the sector will enter 2011 on a firmer footing than looked likely at the end of Q3. Job creation also remained solid, which will be a boost for the broader economic recovery."
The Global Report on Manufacturing is compiled by Markit based on the results of surveys covering over 7,500 purchasing executives in 29 countries. Together these countries account for an estimated 90% of global manufacturing output. PMI data for the United Kingdom were not available for inclusion in the Global PMI at the time of publication.
US manufacturing and construction spending, with CNBC's Steve Liesman & Rick Santelli:
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