Global manufacturing conditions improved sharply in September, with the headline manufacturing PMI rising to 53.0, its strongest reading since February 2022. The latest survey pointed to a broad-based upturn in factory output, new orders, exports and employment, suggesting manufacturers entered the final quarter with stronger momentum than seen for much of the past several years. Production growth was particularly robust, supported by firmer demand for goods, increased spending linked to artificial intelligence infrastructure and defense, and inventory building amid concerns over prices and supply disruptions. Even so, the expansion came with a warning: demand continued to stretch supply capacity, allowing producers to pass higher costs on to customers.
Factory activity accelerates
The global PMI reading of 53.0 signaled a clear improvement in manufacturing health. Excluding the immediate post-pandemic rebound, the September figure was the strongest since May 2018.
Survey indicators suggested global manufacturing output was expanding at an annualized pace of nearly 4%, roughly double the long-term average and the fastest rate since July 2021.
Orders and trade strengthen
New order growth also accelerated to its best level since February 2022, helped by a stronger flow of international trade. Export orders rose at the fastest pace since July 2021, consistent with worldwide trade volumes growing at an annual rate of about 8%.
Demand was lifted by several forces, including investment in AI-related infrastructure, defense spending and precautionary stockpiling tied to geopolitical and supply-chain risks.
Inflation pressures return
The improvement in activity was accompanied by renewed price pressure. Manufacturers reported a faster increase in input costs, partly reflecting higher oil, transport and energy expenses.
Supply constraints also contributed. Delivery times lengthened significantly, while order backlogs rose for an eighth straight month after a long period of decline. These pressures gave suppliers and manufacturers more pricing power.
Hiring picks up
Factories responded to stronger demand by expanding payrolls. Global manufacturing employment rose at the fastest pace since May 2022, as companies moved to increase capacity and keep up with growing order books.
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