S&P Global PMI: Manufacturing at 5-Yr High Amid Rising Demand

Summary

  • The S&P Global Purchasing Managers’ Index (PMI) for the manufacturing sector rose to 54.6 in December, up from 53.8 in November. This is the highest reading since January 2017.
  • The industrial output pace, and new orders, has seen the fastest growth in seven months.
  • New export orders have seen a decline for two months consecutively, due to decreased demand from significant export markets.
  • Huge investments are being made by Russia in the defense sector to increase military production.
  • Despite challenges posed by Western sanctions and pricey imports, the manufacturing sector’s growth is largely based on domestic demand.

Purchasing Managers’ Index Rise

The manufacturing sector of S&P Global PMI saw an incline to 54.6 this December from 53.8 in November. This rise indicates expansion, crossing the 50 mark, and is recorded as the highest since January 2017.

Seventh-Month High in Output

The industrial output soared at its quickest rate in seven months. Furthermore, new orders experienced a significant rise as well.

Export Orders Dip

However, a contrary trend was seen in the export orders, falling for the second consecutive month. S&P Global, in a statement conveyed, that the larger customer demand was primarily driven by the domestic market.

Moscow’s Investment in Manufacturing

Following the February 2022 invasion of Ukraine, Moscow has been investing substantially in ramping up military production, thereby directly contributing to the growth of the manufacturing sector.

Growth Amidst Challenges

Despite the manufacturing sector facing logistical challenges due to Western sanctions and the expensive import goods, the expansion has been primarily based on internal demand. Inflation, although high, is showing signs of reducing, as per the conducted survey.

Workforce Inclusion

Even though labour shortage is a concern, with employment figures at a historic low of 2.9%, staffing numbers are being increased to manage the work backlog. Firms remain hopeful of future prospects following these adjustments.

The optimism originates from planned investments in new products and machinery, giving rise to an elevated level of positive sentiment, despite a three-month low.

Impact on Trading

This development may influence the forex market by strengthening the Russian rouble. The increase in manufacturing output indicates a potential rise in the value of the asset.

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