Our calculation of global manufacturing confidence, utilising PMI data supplied by Markit and the US ISM report, shows an aggregate renewed decrease in November, where the normalised composite index dropped to -0.70 from around -0.5 the previous two months, and from around -0.4 in July-August.

This was because of a deterioration in the Asian series (the Chinese PMI fell from 51.0 to 47.7, while the Korean series fell from 48.0 to 47.1), along with a further decrease in the euro area (from 47.1 to 46.4). In contrast, the US ISM rose from 50.8 to 52.7 and there were also increases in Australia (+0.4 to 47.8), Russia (+2.2 to 52.6) and South Africa (+1.1 to 51.6).
 
Meanwhile, we continue to focus on the normalised difference between new orders and finished goods inventories, which we consider to be a useful lead indicator of the manufacturing sector. This deteriorated to -0.93 in November from -0.64 in October, continuing the downtrend that was strongly apparent during February-September (when this normalised index fell from 0.73 to -0.80).
 
The overall impression conveyed by today's global manufacturing report is that global industrial momentum has continued to decrease to the point where there is now a risk that there could be a mild industrial recession. The only positive news is that the US appears to be seeing some improvement at this particular stage. Nonetheless, as we alerted in the last update of the global manufacturing PMI in October, we expect official data to show further deceleration in the months ahead.
 

source: BarCap