Global manufacturing PMI hits 14-month low

Global PMI

The JP Morgan Global Manufacturing PMI (Purchasing Managers Index) recorded a 14-month low of 51.8 in November. This is its slowest growth pace for the past 15 months. New orders hit a 16-month low, and the trend in international trade volumes stagnated. Manufacturing production rose for the 25th successive month in November, but the rate of expansion eased to its lowest since August 2013.

Global manufacturing PMI hits 14-month low

A slowdown in the pace of growth in the global economy could also impact crude tanker companies such as DHT Holdings Inc. (DHT), Frontline Ltd. (FRO), Teekay Tankers Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and the Guggenheim Shipping ETF (SEA).

Breakdown of countries

Among all the countries, North America was a key growth engine. Canada and The Netherlands together were in third place for output PMI growth rankings. Meanwhile, Mexico and the United States were in fifth and sixth places, respectively. The United Kingdom and Japan also reported solid expansions.

Apart from the slower US expansion, the weakness in the global manufacturing sector mainly reflected stagnation in China and further subdued growth in the Eurozone.

Although the Eurozone indicated a lackluster performance, three of the top-ranked nations (Ireland, Spain, and The Netherlands) recorded solid expansions. This, however, was offset by weaker growth in Germany and contractions in Austria, France, and Italy. Additionally, Brazil, Indonesia, and South Korea reported lower output.

The top five sources of US crude oil imports were Canada, Saudi Arabia, Mexico, Venezuela, and Iraq. Among the major consumers of oil are China, India, and the United States.

Year-end 2014

The global economy is ending the year 2014 in a fragile state. Factory activity is shrinking in China, business growth remains weak in the Eurozone, and there’s a spiraling currency crisis in Russia, the emerging market giant. Economists believe these uncertain times indicate another risk of a global downturn.

Business surveys in Asia and Europe are likely to put pressure on both the European Central Bank and the People’s Bank of China to come up with more stimulus. These factors put pressure on the overall 2015 outlook, given the two economies’ huge global reach.

Although there is poor economic growth, lower oil prices may be beneficial to the fuel costs incurred by crude tanker companies, which we’ll discuss in our next part.