According to the China Federation of logistics and purchasing, the global manufacturing PMI in March 2022 was 54.1%, down 0.8 percentage points from the previous month and 3.7 percentage points from the same period last year. In terms of sub-regions, the PMI of manufacturing industries in Asia, Europe, the Americas, and Africa decreased to varying degrees compared with the previous month, and the decline in the PMI of manufacturing industries in Europe was the most obvious.
The change of the index shows that under the dual influence of the epidemic and geopolitical conflict, the growth of the global manufacturing industry has slowed down, and it is facing the pressure of supply shock, demand contraction, and weakening expectations in the short term. From the perspective of supply, geopolitical conflicts have exacerbated the supply shock originally caused by the epidemic. The price rise of major raw materials, mainly energy and food, has increased inflationary pressure and supply cost pressure; Geopolitical conflicts have hindered international transportation and reduced supply efficiency. From the perspective of demand, the decline of global manufacturing PMI to some extent reflects the problem of demand contraction. In particular, the decline of manufacturing PMI in Asia, Europe, the Americas, and Africa means that the problem of demand contraction is a common problem faced by the world in the short term. As expected, in the face of the combined impact of the epidemic and geopolitical conflicts, international organizations have lowered their economic growth forecasts for 2022. The United Nations Conference on Trade and Development recently released a report that lowered the global economic growth forecast for 2022 from 3.6% to 2.6%. The International Monetary Fund will lower its global economic growth forecast when it releases its latest forecast in April.
The downward pressure on the global economic recovery caused by the dual impact of the COVID-19 and geopolitical conflict should not be ignored. On the one hand, the increasing inflationary pressure has forced many countries to accelerate the process of raising interest rates, and the economic operating costs will rise, thus inhibiting the progress of economic recovery. On the other hand, geopolitical conflicts are changing the energy trade pattern and supply chain layout, which is not conducive to the coordinated development of the global economy, intensifies trade frictions and leads to the rise of trade protectionism and unilateralism.
The key to sustained global economic recovery is openness, cooperation, and inclusive development. Encouraging multilateral trade cooperation should be the main demand of all countries in the world to resist the impact of the epidemic and achieve common recovery. The regional cooperation represented by RCEP and the African free trade area is a model for strengthening multilateral cooperation. Its gradual promotion will be conducive to promoting world economic and trade cooperation and development.
The growth rate of the African manufacturing industry slowed down, and the PMI decreased compared with the previous month
In March 2022, the PMI of the African manufacturing industry decreased by 2 percentage points to 50.8% compared with the previous month, indicating that the recovery speed of the African manufacturing industry slowed down compared with the previous month. COVID-19 has brought challenges to Africa's economic development. At the same time, the Fed's interest rate hike also led to some capital outflows. Some African countries have tried to stabilize domestic funds by raising interest rates and applying for international assistance. Although the impact of the epidemic has not been completely eliminated, some African countries have made decisions to relax epidemic prevention measures, hoping to stabilize economic recovery through the reopening of economic and social life. In addition, an important means for African countries to overcome the impact of the epidemic is to accelerate transformation and upgrade and bring new economic forms through digital transformation. Increasing infrastructure construction related to the digital economy is also an important direction for Africa's stable economic recovery.
Asian manufacturing continued to slow down and PMI continued to decline slightly
In March 2022, the PMI of the Asian manufacturing industry decreased by 0.4 percentage points to 51.2% compared with the previous month, with a slight decline for four consecutive months, indicating that the growth rate of the Asian manufacturing industry continues to slow down. From the perspective of major countries, affected by short-term factors such as the spread of epidemics in many places and geopolitical conflicts, the slowdown in the growth of China's manufacturing industry is the main factor for the slowdown in the growth of Asian manufacturing industry. Looking ahead, the foundation for China's stable economic recovery has not changed. Many industries have gradually entered the peak production and marketing season, and there is room for market supply and demand to rebound. The coordinated development of multiple policies will gradually show its effectiveness in supporting the stability of the economy. With the mitigation of the impact of the epidemic, China's economy is expected to accelerate its recovery. In addition to China, the epidemic has also had a great impact on other countries in Asia. The manufacturing PMI of South Korea and Vietnam also decreased significantly compared with the previous month.
In addition to the impact of the epidemic, geopolitical conflicts and inflationary pressures are also important factors hindering the development of emerging countries in Asia. Most Asian economies import a large proportion of energy and food. Geopolitical conflicts have exacerbated the rise in oil and food prices, pushing up the operating costs of major Asian economies. The Federal Reserve has started the interest rate hike cycle, and there is a risk of capital outflow from emerging countries. According to the data released by the International Institute of Finance (IIF), in February 2022, the net inflow of foreign portfolio funds from emerging markets was $17.6 billion, compared with $66.4 billion in the same month of 2021. At the same time, Asian debt problems have also risen. IMF data show that the proportion of Asian debt in global debt has risen from 25% in 2007 to about 40% at present. Deepening economic cooperation, expanding common economic interests, and tapping the maximum potential of regional growth is the direction for Asian countries to resist external shocks. RCEP also brings new impetus to Asian economic stability.
Downward pressure on the European manufacturing industry appears, and PMI decreases significantly
In March 2022, the PMI of the European manufacturing industry was 55.3%, down 1.6 percentage points from the previous month. It fell for two consecutive months on a month-on-month basis, and the decline was larger than that of the previous month. In terms of major countries, the growth rate of the manufacturing industry in Germany, Britain, France, Italy, and other major countries has slowed down significantly, and the PMI of the manufacturing industry has decreased significantly compared with the previous month. The PMI of the manufacturing industry in Germany has decreased by more than 1 percentage point, and that in Britain, France and Italy has decreased by more than 2 percentage points. The PMI of the Russian manufacturing industry fell below 45%, a decrease of more than 4 percentage points.
From the change of the index, under the dual influence of geopolitical conflicts and the epidemic, the growth rate of the European manufacturing industry slowed down significantly compared with last month, and the downward pressure increased. The European Central Bank lowered its economic growth forecast for the eurozone in 2022 from 4.2% to 3.7%. The report of the United Nations Conference on Trade and Development predicts that the economic growth in some parts of Western Europe will slow down significantly. At the same time, geopolitical conflicts have significantly increased inflation pressure in Europe. In February 2022, the inflation rate in the euro area rose to 5.9%, reaching an all-time high since the birth of the euro. The policy balance of the European Central Bank has been more inclined to deal with the increasing upward risk of inflation. The European Central Bank has considered further promoting the normalization of monetary policy.
The growth of the manufacturing industry in the Americas slowed down, and the PMI decreased
In March 2022, the manufacturing PMI in the Americas decreased by 0.8 percentage points to 56.6% compared with the previous month. According to the data of major countries, the manufacturing PMI of Canada, Brazil, and Mexico increased in varying degrees compared with the previous month, but the manufacturing PMI of the United States decreased by more than 1 percentage point compared with the previous month, resulting in a decline in the overall manufacturing PMI of the Americas.
The change of the index shows that the slowdown in the growth of the US manufacturing industry compared with the previous month is the main factor for the slowdown in the growth of the manufacturing industry in the Americas. Ism's report shows that in March 2022, the PMI of the U.S. manufacturing industry decreased by 1.5 percentage points to 57.1% compared with the previous month. The sub-index shows that the supply and demand growth of the US manufacturing industry has slowed down significantly compared with the previous month. The index of production and new orders dropped by more than 4 percentage points. Enterprise reports show that the US manufacturing industry is facing problems such as shrinking demand, blocked domestic and international supply chains, labor shortages, and rising raw material prices. Among them, the problem of price rise is particularly prominent. Ism report shows that the price index in the US manufacturing PMI has exceeded 80%, with a month-on-month increase of more than 10 percentage points. According to the data released by the US Department of labor in February, the US consumer price index (CPI) soared by 7.9% year-on-year in February, surpassing expectations again, setting a record since June 1982.
The Federal Reserve's assessment of inflation risk has gradually changed from temporary in the initial stage to the inflation outlook has significantly deteriorated, and said that it may respond to price inflation with more radical interest rate hikes. But raising interest rates is also a double-edged sword. While the role of interest rate hikes in easing inflationary pressures remains to be assessed, the downside risks to economic recovery should not be ignored. Recently, the Federal Reserve lowered its economic growth forecast for 2022, and sharply lowered its GDP growth forecast from the previous 4% to 2.8%. In addition, US consumer confidence has also declined. According to the data from the University of Michigan, the U.S. consumer confidence index in March 2022 was 59.4%, falling for three consecutive months, falling below 60% for the first time since October 2011, down 25.5 percentage points compared with the same period last year.