GLOBAL MACRO: Global IP/Trade Outlook Subdued

The JP Morgan global manufacturing PMI moderated to 49.6 in December from 50.0. While the Q4 average remained below the 50-breakeven level at 49.7, signalling a slight contraction in global manufacturing activity, it was 0.4pp higher than the Q3 average. Global IP and trade growth was fairly steady over 2024 and that trend continued in October and the PMI is signalling that that remained the case going into year end. 

• The CPB’s measure of global IP rose 0.3% m/m to be up 1.8% y/y in October, close to the 2024 and Q3 averages. 3-month momentum is positive at a steady rate. IP growth looks likely to continue but at lacklustre rates. Business sentiment in the PMI fell to a 3-month low, signalling a weak outlook.
• Global trade was flat in October with annual growth moderating to 1.7% from 2.5%, but still above the 2024 average but lower than Q3’s 2.3% y/y. 3-month momentum is picking up though. However, exports orders contracted at a faster pace in December with only 8 of the 30 countries surveyed recording a rise, according to the PMI.
• Apart from November, the manufacturing PMI has been in contractionary territory since July. The drop in December was driven by weaker orders and output with some regions particularly concerned about the impact of possible US tariffs (only 13 of 30 countries recorded a rise in production). Employment also fell but at a slower pace.
• Intermediate and capex sectors posted contractions in output, while consumer goods continued to grow (17th consecutive month).
• Cost pressures picked up to 54.4 from 53.9, 4-month high, but selling price inflation eased to a 9-month low.

Global growth