Supply Chain Matters provides highlights of March and Q1- 2023 reported global and regional PMI indices which reinforce a state of stabilization within global supply chain networks. However, we discern some added signs excess inventories and of production sourcing shifts.

As noted in our February highlights, such a state can imply a breather, a turning point, or pending shifts.


Global Manufacturing Activity Levels

Global manufacturing activity as reported by the J.P. Morgan Manufacturing PMI®, compiled by S&P Global in association with ISM and IFPSM, provided a banner headline of global manufacturing output showing signs of stabilizing at the conclusion of Q1.  That stated, the reported 49.6 value for March was down 0.3 percentage points from the value of 49.9 reported for February with this index within a contraction value for the seventh successive month.

From our lens, the latter is evidence of recessionary manufacturing conditions that are now stabilizing.

The overall Q1 average was a contraction value of 49.5, but represented 0.6 percentage points higher than the average value of Q4-2022 which was 48.9.

The report indicates that March activity was impacted by slower growth in output and manufacturing employment, but with indicated improvements in supplier delivery times.

A specific statement that caught our attention indicated: “Supply chains continued to recover from the immense pressure experienced through much of the past three-and-one-half years, as average vendor lead times shortened to the greatest extent since May 2009.”

That is a positive sign

Of continued interest was that India and Thailand indexes (included in our highlights below) reflected the quickest rates of expansion. China’s expansion was noted as marginal by the end of Q1.

The separate S&P Global PMI® Commodity Price and Supply Indicators index noted that the Global Supply Shortages Index dipped to a 30-month low while The Global Price Pressures Index dropped further in March and at the slowest pace since June 2020.


Source: S&P Global, April, 2023


Highlights of Regional Reporting

Developed Regions


The S&P Global Eurozone Manufacturing PMI® fell again in March to a value of 47.3 compared to the February value of 48.5, and January value of 48.8. The overall average for all of Q1-2023 was 48.6 as contrasted with the Q4-2022 average quarterly value of 49.5.

Commenting on the March report, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence indicated in-part:

Eurozone manufacturing remains in troubled waters, with factories reporting a fall in demand for goods for an eleventh straight month amid the surging cost of living, tighter monetary policy, a shift to inventory destocking and subdued customer confidence.

Manufacturing output volumes reportedly grew marginally in March. Further indicated was that a “survey-record shortening in suppliers’ delivery times boosted the supply of critical raw materials and components, thereby supporting greater production levels.”

The report indicated that the volume of new orders fell for the eleventh month running in March. New export orders also fell. Further concerning was that the volume of warehouse finished goods inventories rose to the greatest extent in four months.

Counties reaching PMI new highs were noted as Greece and Spain with Italy having expansion level activity levels in March. The PMI values reflective of Germany and Austria both reached 34-month lows in March while both led in the expansion of post-production inventories.

The somewhat related S&P Global /CIPS UK Manufacturing PMI® fell to contraction as new business activity remained weak. Reportedly new export orders decreased, and overall new order volumes posted only fractional growth in March.

United States

Two indices of U.S. manufacturing activity levels reflected continued contraction in March.

The S&P Global US Manufacturing PMI® reported a March value of 49.2, 1.9 percentage points above the February value of 47.3, and 2.3 percentage points from the 46.9 value reported for January.  The March report was headlined with a renewed rise in output with manufacturers reflecting a fractional rise in production levels in March. Panelists reportedly indicated that new orders decreased due to higher interest rates and inflationary pressures which are impacting customers.

The March 2023 Manufacturing ISM® Report on Business®  fell to a value of 46.3 in March, the fifth consecutive month of contraction and noted as the lowest value since 2020. A Bloomberg survey of economists were anticipating a consensus value of 47.5, similar to the S&P U.S. index. The average Q1 value of this index was 47.1, dipping 2.1 percentage points below the Q4-2022 average of 49.2. The sub index of Production incurred a reported 0.5 percentage point increase in March while the Inventories sub-index dipped to the contraction value of 47.5, 2.6 percentage points lower than the February reading. Timothy Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee observed in part that: “New order rates remain sluggish as panelists become more concerned about when manufacturing growth will resume. Supply chains are now ready for growth, as panelists’ comments support reduced lead times for their more important purchases. Price instability remains, but future demand is uncertain as companies continue to work down overdue deliveries and backlogs.”


Taiwan’s activity as reflected in the S&P Global Taiwan Manufacturing PMI® March report indicated a milder deterioration in production operating conditions. The March value of 48.6 was down marginally from February’s 49.0 value. The March report noted that the rate of decline remained softer than values recorded in the second half of 2022.  Of added significance the Q1-2023 average value of 47.0 was 4.4 percentage points higher than the Q4-2022 average 42.6, a significant momentum change. However, panelists reportedly expressed business confidence as weak in their outlooks for the remainder of 2023.


Developing Regions


Manufacturing activity levels across India remained at high expansion levels both in March and for all of Q1. The S&P Global India Manufacturing PMI® reported a value of 56.4 for March, a 1.1 percentage point increase from the 55.3 value recorded for February. The March report was headlined with firms rebuilding input stocks at a near-record pace amid faster expansions in new orders and production output. Demand resilience and competitive pricing was reportedly attributed by panelists as ongoing growth drivers. Further noted was improved availability of raw materials among suppliers resulted in shorter delivery times and declining supply price pressures.


The S&P Global Thailand Manufacturing PMI® remained at high levels during Q1-2023 growing at a steady pace since November 2022. The overall average for Q1 increased 2.4 percentage points from that of Q4-2022. The March report was headlined as “Solid manufacturing sector expansion sustained in March.”



The two recognized indices of PMI within China each reflected an easing of prior production growth.

The Caixen China General Manufacturing PMI®, a reflection of either private and SMB businesses recorded a value of 50.0 for March compared to 51.6 for February, and 49.2 for January. The average of Q1-2023 of 50.3 was 1.1 percentage points above the 49.2 value of Q4-2022. The report authors noted that Chinese manufacturers registered softer gains by the end of Q1. February’s value marked the first improvement in seven months underpinned by the continued easing of Covid-19 restrictions. The March reported further pointed to improved supplier capacities and stock availabilities in March. Business confidence was noted as an upbeat outlook toward the remainder of 2023.

China’s official PMI index compiled by country’s Statistics Bureau and weighted toward state-owned manufacturers declined to 51.9 in March from February’s reported 11-year high value of 52.6. The report’s authors pointed to the production sub-index declining to 54.6 in March after rising to 56.7 in February. The new orders sub-index declined to 53.6 after rising to 54.1 in February.  The report’s government authors noted that manufacturers face challenges that include weak demand, tighter availability of capital and high operating costs.


Supply Chain Matters Added Insights and Perspectives

In our prior commentaries highlighting both January and February global PMI indices, our stated observation was that of stabilization. In other words, the bleeding of supply disruptions has coagulated. While global production levels remain in contraction, the slope is that of stabilized contraction barring any unexpected disruption.  In February there were clear indicators of moderation in supply chain volatility.

Product demand levels continue to remain uncertain given inflation stressed consumers and businesses, and continued geo-political developments. That notion was brought out in certain March country reports. A prior consensus of a belief that the second half of this year will present more normalcy, now appears uncertain. Inventory levels in intermediate or finished goods remain high and there is little evidence of an inventory replenishment cycle in Q1.

On the online retail, logistics and customer fulfillment demand side, declining volumes are taking a toll resulting in precipitous drops in global freight rates and noted as the worst in a decade. Some transportation services executives now open describe a freight rate recession.

In these March highlights we have pointed to shifting production numbers involving countries across Asia which may be reflective of industry supply network moves toward China Plus supply network resiliency moves or movements toward alternative low cost manufacturing regions. We addressed that movement in our prior highlights of the China Business Climate Survey Report from the American Chamber of Commerce of China.

Once again, businesses and their respective supply chain management teams need to continue with a diligent assessment of the global and domestic supply chain landscape relative to demand and supply trending, along with various business and supply chain risk factors.


Bob Ferrari

© Copyright 2023, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.