Global manufacturing confidence improves for first time in four months

The final reading of the Barclays global manufacturing confidence improved to -0.54 in October from -0.71 in September, arresting four consecutive months of decline. The improvement in global business confidence was driven by positive PMI prints from Japan and the euro area, a notable rise in sentiment in the UK, an improvement in China Markit PMI (although the official NBS reading remained flat), as well as stable manufacturing confidence in the US.

"While encouraging, it would be advisable to wait for more evidence than this one-month improvement to call for a change in the trend of global sentiment, which has, year-to-date, been indicating a fairly subdued near-term future for the manufacturing sector", says Barclays.  

In terms of components, new orders improved to -0.53 in October from -0.66 in September on a solid rise in US orders, as well as improvements in the euro area, UK and Japan. Global inventories, meanwhile, dipped to 0.02 from 0.24, resuming the trend of global destocking witnessed between April-August this year. 

Consequently, the forward-looking new orders less finished goods inventories measure improved to -0.42 in October. In terms of the regional details, China's official NBS manufacturing PMI for October stood flat at 49.8, remaining in the contraction (sub-50) zone for the third month in a row. 

While a slight uptick was witnessed in new orders, production and employment sub-indices dipped marginally. The inventories sub-index ticked up in October, snapping three consecutive months of decline. 

Meanwhile, the Markit PMI index edged up to 48.3 in October, from 47.2. On balance though, the PMIs continue to point towards weak growth momentum in Q4. For more details, see China: October NBS PMI stays flat; searching for signs of growth stabilisation.