In the late 1970s, as containerisation was still reshaping the backbone of global logistics, shipowners learned a blunt truth: it was not freight rates alone, but shifts in manufacturing rhythms that redrew trade lanes and dictated the flow of cargo. That insight remains just as relevant today. Factory surveys, much like the steel orders of that earlier era, now serve as leading signals for demand cycles, inventory adjustments, and sourcing patterns. The headline global manufacturing PMI for September stood only marginally in expansion, at 50.8, offering the appearance of resilience, but the internals tell a more complex story. New orders have cooled, backlogs have been run down for several months, and suppliers’ delivery times have normalised, stripping out the inflationary pulse they carried in recent years. In short, world’s factories are treading water rather than sprinting forward, though the patterns differ sharply by region and firm size. The “big eight” – China, the U.S., Eurozone, Japan, South Korea, Taiwan, the U.K., and India – account for three-quarters of global manufacturing output and trade flows. Their PMI readings therefore carry disproportionate weight, serving as a bellwether for raw material demand, energy consumption, and the trajectory of seaborne trade.
China’s September PMI rose to 49.8, up 0.4 points from August, the highest in six months but still shy of the 50-point threshold. The details show variation by enterprise size: large firms recorded an expansion at 51.0, medium firms slipped to 48.8, and small firms rose by 1.6 points to 48.2. The production index climbed to 51.9, its best since March, signalling stronger output momentum, while new orders improved slightly to 49.7. Purchasing activity strengthened, with raw material procurement rising to 51.6, indicating that firms anticipate continued demand. Sectoral breakdowns highlight equipment, high-tech, and consumer goods manufacturing all in expansion, at 51.9, 51.6, and 50.6 respectively, well above the industry average. Within these, food processing, automobiles, shipbuilding, railway, and aerospace recorded business confidence indices above 57.0. Yet structural headwinds remain. The property sector continues to weigh on heavy industry, and without a more durable pickup in household confidence and investment, momentum risks fading. Targeted easing measures have helped, but for now, industrial activity hovers in a narrow band between contraction and stability.
The U.S. offers a textbook case of survey dispersion. The ISM manufacturing index printed at 49.1 in September, its 11th month in contraction, though less severe than in mid-year. By contrast, the S&P Global U.S. Manufacturing PMI stood at 52.0, still in expansion but down from 53.0 in August. This divergence is not statistical noise but reflects methodology. ISM is weighted toward traditional heavy industry and larger producers, while S&P Global draws in a broader set of firms including smaller manufacturers. Both, however, point to cooling orders and weaker forward momentum. U.S. output has now expanded for four consecutive months, but the rate of growth has slowed as backlogs are cleared and inventories accumulate. Finished goods stockpiles rose for the second month running, reflecting both soft demand and the need to draw down raw materials accumulated in anticipation of tariff measures. Companies are already discounting excess stock, which alleviates some price pressures but underlines fragile demand. Supply chains have also come under renewed stress, with September reporting the sharpest increase in tariff-related delays since October 2022. With new export orders softening and the orders-to-inventory ratio at its weakest since late 2024, the sustainability of production gains is in question.
Across Asia, the picture is mixed. The region’s composite PMI edged to 50.7, only slightly higher than August’s 50.6. Japan stood out on the downside, with the S&P Manufacturing PMI sliding to 48.5, the lowest in six months. Output and new orders contracted steeply, reflecting continued weakness in external demand. Taiwan fared worse, with its PMI falling to 46.8, extending its run in contraction as the global electronics cycle remains under strain. Other Southeast Asian markets, including the Philippines and Malaysia, also reported contraction, reflecting subdued global orders. South Korea provided a brighter spot: its manufacturing PMI climbed to 50.7, its first expansion in eight months, buoyed by stronger overseas demand, particularly for semiconductors. Still, the outlook is shadowed by ongoing negotiations with Washington over tariff reductions. India’s PMI, though still among the world’s strongest, lost some momentum, easing to its weakest pace in four months. The imposition of 50 percent tariffs on Indian exports to the U.S. appears to be filtering through, cooling external orders. Vietnam’s PMI held steady at 50.4, marking a fifth month of modest expansion. Rising new orders helped sustain output, though the pace of growth was the weakest since June, and international demand remains subdued despite incremental clarity on U.S. tariff policy.
In Europe, signs of fragility have re-emerged after a fleeting period of stability. The HCOB Eurozone Manufacturing PMI fell back below the neutral line to 49.8 in September from August’s 50.7, ending its first positive reading in over two years. Export orders were particularly weak, falling at the fastest rate in six months, and declines were broad-based across consumer, capital, and intermediate goods. The forward outlook remains cautious, with high borrowing costs and sluggish external demand weighing on production. In the United Kingdom, conditions were worse still, with activity contracting at the fastest rate in five months. Weak domestic demand and falling export orders underscore the structural challenges facing British manufacturing, which continues to lag its European peers.
Taken together, September’s PMI landscape portrays a global manufacturing sector searching for momentum but constrained by tariffs, weak trade growth, and cautious investment. The “big eight” continue to dominate the narrative: China shows tentative stabilisation, the U.S. displays survey divergence with slowing orders, Europe has slipped back into contraction, Japan and Taiwan are under strain, South Korea and Vietnam provide flickers of improvement, while India remains a bright spot, albeit one dimmed by tariffs. Against this backdrop, commodity and freight markets were left digesting two parallel developments during Golden Week. In Asia, the China Mineral Resources Group reportedly instructed steelmakers and traders to suspend dollar-denominated iron ore purchases from BHP, clouding sentiment across the Pacific basin. The move, widely seen as a bargaining tactic in annual pricing talks, unsettled Capesize earnings, which fell sharply on the week. In the Americas, U.S. soybean farmers faced a fresh challenge as China shifted purchases to Argentina, where tax incentives made exports more competitive. For shipping, the message from September’s PMI data is not one of outright contraction but of divergence and fragility. Industrial cycles are moving at different speeds, and while some economies are finding footing, others are struggling to regain traction.
Data source: Doric