Pic: Adobe Stock
The manufacturing sector continued to lead the downturn at the beginning of this year, albeit with the rate of decline moderating, it said.
Manufacturing new export orders extended the sequence of decline to 23 months in January, though the rate at which export demand fell was the slowest since June 2022.
This was amidst improvements in overall demand conditions, with worldwide manufacturing total new orders (including domestic sales in each economy) close to stabilising in January.
Optimism among manufacturers rose at the beginning of 2024 with the manufacturing sector's PMI future output index posting the highest reading in nine months.
Although a Red Sea crisis-driven renewed worsening of lead times was observed, hopes for better manufacturing sector conditions in the 12 months ahead were buoyed by rate cut prospects and the reduced drag from destocking efforts.
While developed markets recorded a twentieth monthly declined in trade activity, the pace of decline eased to the slowest in the current sequence and was only modest overall, the report noted.
Measured across both goods and services, trade mainly improved in two Asia Pacific economies—India and China. Most developed nations meanwhile continued to see trade conditions weaken though a near-stabilisation of conditions was observed in the United Kingdom.
Canada and the European Union recorded sharp and almost comparable rates of new export orders decline in January, though both regions saw the situation ameliorate slightly compared to the end of 2023.
A more pronounced downturn in manufacturing export orders continued to be observed in Canada compared to services. Likewise for the EU, the manufacturing sector export order contraction was historically marked despite the pace of decline easing for a sixth successive month in January.
France and Germany continued to record especially sharp falls new export business led by their respective goods producing sectors.
While the EU saw visible impact from disruptions in the Red Sea across the globe, the lack of new work, including from abroad, continued to act as a bigger dampener for activity in the region, Jingyi Pan, economics associate director at S&P Global Market Intelligence, wrote in the report.
Meanwhile, the United Kingdom saw new export orders stay broadly unchanged at the start of 2024, marking a relative improvement in trade conditions from the end of last year.
The United Kingdom notably experienced a more material impact compared to the rest of the world in terms the disruptions from the Red Sea on both supply chain and prices, though data also suggested that manufacturers expect these issues to be temporary.
India remained the only economy to see a solid improvement in trade conditions at the start of 2024, leading the growth in the emerging market space, though export orders also rose to a lesser degree in China for the first time since June 2023.
Faster expansions in both manufacturing and services export business were observed at the start of the year for India, with the rate of manufacturing sector export orders growth notably outpacing that of services to run against the global trend.
Brazil and Russia recorded moderate declines in overall export orders at the start of the year.
S&P Global Market Intelligence produces the monthly report in collaboration with GTAS Forecasting.
Fibre2Fashion News Desk (DS)