Global Manufacturing Assessments Show Ongoing Manufacturing Weakness

Among these 18 countries and regions reporting manufacturing information in February, 12 of them show month-to-month improvement. Ten showed improvement over three months compared to six months while only three have improved over six months compared to 12 months. Eight of eighteen showed improvement over 12 months compared to 12-months ago.

The median manufacturing PMI reading for February is 49.5, just below the level of 50 that marks the level where manufacturing is considered unchanged. The average over 3 months, 6 months, and 12 months all are below the 50-mark. However, the median reading in the table marked with percent sign (%) measures the percentage of the raw PMI diffusion readings that are improving period-to-period. All are above the 50% mark, showing that there are more reporters showing improvement period-to-period than showing weakness. However, the percentage improvement does not reflect the value of the underlaying PMI index or if it is above or below its break-even value; it only shows relative improvement.

In that sense, there are some mixed signals in this report. Conditions are slowly improving, but they still show a tendency for output to fall.

The table also looks at a broad assessment by ranking the level of the diffusion reading this month across all countries on a timeline back to January 2021. On this basis, 9 of 18 are below the 50% mark. This metric identifies the median of the series since January 2021. The median of the rank standing is at the 49-percentile mark, just below 50%, which marks the median of group for the entire period.

None of this is really good news for manufacturing globally. But it is an absence of really bad news and contains news that conditions are worsening. Improvement is more common than worsening. So that is something. It is a back door to better times ahead but again it is true that manufacturing has been weak for quite a long time. In the last 31 months, the median for the group has been above the ‘50’ mark only twice in June and July of 2024. However, over the last eight months the diffusion median has been at a reading of 49-point ‘something.’ The manufacturing median has been on cusp of moving to signal expansion. But manufacturing in the global economy has not been able to go over the hurdle despite as close as it has come. We remain dwellers on the threshold…of expansion. Still not quite there yet.