Supply Chain Matters provides a further global supply chain assessment in the highlighting and added insights on reported October 2023 global and regional production and supply chain PMI indices.


In our prior highlights and perceptions of September and Q3-2023 published indices, we observed that the numbers once again signaled added contraction in global manufacturing output and product demand levels.

Factoring PMI reporting for the month of October, the first month of the final quarter of 2023, the various published actual and leading indicator indices indeed reinforce and affirm continued contractionary conditions and a sense of eroding of business and supply chain management optimism.

Global Wide Manufacturing Activity Levels

Global manufacturing activity as reported by the J.P. Morgan Global Manufacturing PMI® for October 2023, compiled by S&P Global in association with ISM and IFPSM, provided a banner headline of weak product demand levels globally. With output contracting for the fifth consecutive month and business optimism reportedly dipping to an 11-month low, the report pointed to cutbacks occurring in manufacturing employment, purchasing and inventory levels globally.

The October PMI reported value fell to a three-month low of 48.8, down from the 49.2 value reported for September. This index has now remained below the 50.0 contractionary mark for fourteen consecutive months and reportedly the longest sequence of deterioration since the period of December 2000 to February 2002.

The report’s authors indicated that data broken down by production sector reflected that deteriorating conditions were confined to intermediate and investment goods industries. As we have noted in our many prior commentaries, such segments contracting are not a positive sign for future supply network momentum in the weeks to come.

On the other hand, the latest report points to consumer goods production rising at the quickest pace in five months. From our lens, this trend may be an indicator of seasonal demand in that the final quarter is usually holiday related demand and spending.

On a regional basis, Europe reportedly remained a principal drag on global factory output, along with what were described as slight dips in production volumes across Asia.

Commenting on the October data, Bennett Parrish, Global Economist at J.P. Morgan indicated in-part:

The global manufacturing sector remained downbeat in October. The output index from the PMI survey dipped 0.9 pts to 48.9, it’s lowest level for three months. The downturn in new orders also extended to 16 months, a survey-record sequence of decline.”

Global Manufacturing PMI highlights


Key Highlights in Regional PMI Reporting

Factory Orders Sharply Decline Across the Eurozone

The HCOB Eurozone Manufacturing PMI® report for October was again headlined with plummeting new orders rates and rapidly depleting backlogs of work. The report authors especially cited: “steep and accelerated contractions in new orders, purchasing activity and backlogs contributing to another considerable fall in factory production.”

The reported October value of 43.1 declined 0.5 percentage points from September’s value of 43.4, with yet another indication of continued manufactory economy deterioration. Activity levels in France reportedly recorded its strongest deterioration in factor conditions in nearly three-and-a-half years. Germany reportedly remained the worst performer while faster declines were reported for Italy, Spain and Ireland.

The October report narrative further indicated that European manufacturer’s initiated additional job cuts in order to make additional cost savings.

United Kingdom

In the dependent region of the United Kingdom, the S&P Global/CIPS UK Manufacturing PMI® posted a value of 44.8, a 0.5 percentage point increase from the 44.3 value reported for September.

The latest report narrative pointed to output, new orders and employment each declining, amid continued uncertain market conditions. Stocks of purchases reportedly continue to decline, and supplier delivery times improved, a sign of continued weak demand levels. Business optimism reportedly retreated to a ten-month low.

Mixed Indications Involving U.S. Manufacturing

The two widely followed indices of U.S. manufacturing activity levels reflected somewhat different indicators for October activity.

The S&P Global US Manufacturing PMI® October report was headlined with a stabilizing of manufacturing conditions amid a renewed rise in new order activity and ending a reported five-month sequence of declines. That stated, product demand conditions were stated as “muted.”

The October value of this index was posted a neutral value of 50.0 compared to September’s 49.8 value. This latest value of this index was noted as the highest since April and indicative of a stabilization in the health of the U.S. manufacturing sector.

The Manufacturing ISM Report on Business® reported an October value of 46.7, reflecting a 2.3 percentage point decline from September’s 49 value. Commentary from Anthony Fiore, Chair for ISM’s Business Survey Committee noted in-part: “The U.S. manufacturing sector continued to contract and at a faster rate in October, dropping 2.3 percentage points to 46.7 percent, compared to September’s reading of 49 percent.” Fiore further stated: “Demand remains soft, but production execution is stable compared to September as panelists companies continue to manage outputs, material inputs and- more aggressively- labor costs. Suppliers continue to have capacity.”

Given the differing perspectives from both of these reports we will defer to the November report to ascertain specific trending of activity levels.

Revival of Demand for Mexican Products

The S&P Global Mexico Manufacturing PMI® was headlined as a revival in demand for Mexican goods and: “a considerably better operating environment at the start of the fourth quarter.” Total sales were noted as expanding at “the strongest rate in over four-and-half-years.” This index rose from 49.8 in September to a value of 52.1 in October. Reportedly, all five sub-indexes (output, new orders, employment, inventories and supplier delivery times) had a positive directional influence on the overall PMI.

New orders reportedly increased at the quickest pace since February 2019, primarily from domestic demand and the launch of new products. Export business reportedly decreased for the second straight month and at the fastest rate since March 2022. Causes were noted as weak demand from U.S. customers and unfavorable foreign exchange rates.

China’s Production Activity Levels Contract In October

The two recognized indices of PMI within China both indicated contractionary PMI conditions during October.

The Caixen China General Manufacturing PMI®, a reflection of either private or SMB businesses was headlined with renewed deterioration in overall manufacturing conditions across China in October, qualified as marginal overall.

The reported October value of 49.5 September value declined 1.6 percentage points from the 50.6 reported for September. The latest report pointed to “firms registering a fresh fall in production amid slower growth in overall sales, with the latter dampened by weak foreign demand.” Employment across the sector reportedly fell once again, and at a quicker rate than in September. On the costs front: “Chinese mid-market manufacturers signaled “the quickest increase in average input prices since January, leading to a further rise in selling prices.” Firms reportedly made greater usage of current stocks, partly to help control costs, which led to: “a moderate decline in inventories of inputs.” Weaker-than-expected sales and the delayed shipment of goods led to: “the strongest rise in inventories of postproduction items since September 2015.

China’s official PMI index compiled by country’s National Bureau of Statistics (NBS) and weighted toward state-owned manufacturers, unexpectantly contracted in October. The reported value of 49.5 declined 0.7 percentage points from the 50.2 recorded for September. The non-manufacturing PMI weighted towards services fell to 50.6 in October from 51.7 reported for September, its lowest reading in 2023. Manufacturer’s reportedly faced weakened demand from both domestic and overseas customers. Exports reportedly declined amid rising interest rates across the U.S. and Europe.

The Chinese government is cutting interest rates and instituting added stimulus actions to spur the manufacturing and services economy. Concerns are building for the country’s real estate sector along with increasing geo-political tensions involving Europe, the Middle East, along with building trade tensions with the U.S.

India’s Manufacturing Sector Decelerates

Overall manufacturing activity across India subsided again during October as demand levels for certain products faded. The S&P Global India Manufacturing PMI® slipped from a value of 57.5 in September to a value of 55.5 for October.

There were reportedly slower increases in new orders, exports and purchasing buying activity. Cost pressures reportedly intensified, and business confidence levels reportedly slipped to a five-month low. While business sentiment reportedly remained positive, there are concerns surrounding high inflation levels globally along with generally constrained product demand levels.

Deterioration Among ASEAN Manufacturers

For this highlight of October PMI activity, we wanted to include for our readers the S&P Global ASEAN Manufacturing PMI®. This index is a compilation of seven ASEAN nations- Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. These nations reportedly account for 98 percent of ASEAN manufacturing value added.

The headline PMI of this grouping for October was unchanged at a value of 49.6. The overall narrative was described: “The latest reading was indicative of a marginal deterioration in operating conditions for the second month running.” The October report further indicates: “Of the seven ASEAN nations covered by this survey, five recorded a deterioration in the health of their manufacturing sector, the highest number of countries to report a decline since August 2021.”

The report further opined on 12 month outlook: “Manufacturers retained a positive outlook for output, with firms generally anticipating an expansion of production in the coming 12 months. That said, the degree of confidence weakened to a three-month low and remained below the series average.”


Added Insights and Perspectives

Since our highlighting of June and Q2 global wide PMI reporting, we have called attention to leading indicator indexes reflecting tepid new order rates and souring business optimism will more than likely extend into the final three months of 2023.

October’s reporting clearly reinforces this ongoing trend.

In October Supply Chain Matters highlighted the IMF’s latest October forecast of global wide growth that was themed with key risks growing and that rather than sprinting, the global economy will limp along in 2024. World economic growth will reportedly slow from 3.5 percent in 2022 to a forecasted 3 percent this year, an anticipated 2.9 percent in 2024.

Remaining on a positive note is continued evidence that global wide industry chain volatility levels have subsided to pre-pandemic levels, including predictable supplier lead times. The S&P Global PMI™ Commodity Price and Supply Indicators report for October reinforced that component supply shortages remain at their lowest levels since January 2020 and that global price pressures among commodities have broadly stabilized.

Once again, as the final quarter transpires with an overall trending toward contracting product demands and added geo-political risk factors, businesses and their associated supply chain management teams must scrutinize their planned and expected 2024 product demand and supply needs. And yes, this exercise will more than likely require a good amount of scenario based or what-if planning approaches given the continued high level of risk factors across global supply networks and in the geo-political landscape.

We will continue in our efforts to provide reference to pertinent information, added perspectives and viewpoints, leading to our 2024 Research Advisory of 2024 Predictions.

Stay tuned.

Bob Ferrari

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