Graph showing the manufacturing PMI level and trend for various areas as of December 31, 2023. Levels below 50 indicate contraction and above 50 indicate expansion. The eurozone manufacturing PMI was up to 44.4. The U.S. manufacturing PMI was down to 47.4. The global manufacturing PMI was down to 49. The Japanese manufacturing PMI was down to 47.9. The Chinese manufacturing PMI was up to 50.8.
Line chart showing the global supply chain pressure from September 1997 to December 2023. There had not been any sustained pressures until 2020. Supply chain pressures spiked with the pandemic, fell until the end of 2020, then rose again peaking in late 2021. Pressures have declined as deliveries normalized. In recent months, pressures have increased but remain within the normal, pre-pandemic range.
Sources: Top chart: Bloomberg, IHS Markit, and Wells Fargo Investment Institute, as of December 31, 2023. Bottom chart: Bloomberg and Wells Fargo Investment Institute. Monthly data from September 1, 1997 to December 31, 2023. PMI = Purchasing Managers’ Index. GDP = gross domestic product. The PMI is an index developed from monthly business surveys used to monitor the condition of industries and businesses. The Global Supply Chain Pressures Index is normalized so a zero indicates the index is at its average value with positive values representing supply chain tightening.
Key Takeaways
- Deteriorating conditions in recent months have left manufacturing activity in major developed economies near or in a recession, due to spending's rotation from goods to services and pressure on household finances.
- Supply chains have largely recovered, and financial conditions have eased substantially. However, less ample liquidity likely will create an added headwind for consumer spending, investment, and manufacturing through early 2024.