The latest PMI data suggest that the activity hit from lockdowns and tighter restrictions in November won’t be sufficient to prompt another contraction in global growth, and that the industrial sector continues to perform strongly.
The global manufacturing PMI is now around the level seen during the 2017 mini-boom period, implying that Q3’s strength will extend into Q4. Heading into 2021, services look set to be the biggest beneficiaries of the rollout of vaccine programs. Even so we expect industry to continue to fare well.
Orders have outperformed actual production this year, resulting in a decline in inventories. Even if orders growth tails off, stocks are likely to be replenished in the shorter term, supporting production growth.
Meanwhile, although the eventual vaccine-related re-opening of services will reorientate household spending, it will also boost demand for industrial goods used as inputs by service sector firms. More generally, demand will also be boosted by the accompanying increase in services employment