Skip to main content

December Global PMI Data Shows Cautious Improvement, Economic ‘Resilience’

As 2021 came to a close in December, global manufacturers generally reported slightly improved conditions, from easing inflation and cost burdens to supply chains and deliveries on the mend.

IHS Markit’s monthly Purchasing Manager’s Index (PMI) among major economies and apparel and textile suppliers indicated slow progress from these key issues, and economists said problems persist and the surge in Covid-19 Omicron variant cases puts growth at risk.

United States

U.S. private-sector businesses indicated a strong upturn in output at the end of 2021, despite the rate of expansion easing to the slowest for three months.

Adjusted for seasonal factors, the IHS Markit U.S. Composite PMI posted 56.9 in December, down slightly from 57.2 in November, but still signaling a strong rise in private-sector business activity.

Labor and input shortages, alongside greater distribution costs, led to the steepest increase in input prices on record in December. Companies reported broad-based upticks in cost burdens, with a range of key materials noted higher in price, alongside soaring transportation and distribution fees. Despite the increase in costs, the pace of inflation of prices charged for goods and services softened for the second month running in December, with some firms citing efforts to boost sales amid stronger competition.

“The survey data paint a picture of an economy showing encouraging resilience to rising virus infection rates and worries over the Omicron variant,” Chris Williamson, chief business economist at IHS Markit, said. “Business growth slipped only slightly during the month and held up especially well in the vulnerable service sector. Manufacturing output growth even picked up slightly amid a marked easing in the number of supply chain delays, which also helped to take pressure off raw material prices.”

Related Stories

“Barring the initial price slide seen at the start of the pandemic, December saw the steepest fall in factory input price inflation for nearly a decade,” Williamson added. “The worry is that rising wage growth, greater transport costs and higher energy prices have pushed service sector cost inflation to a new high, and that any renewed disruption to global supply lines resulting from the Omicron wave could lead to renewed upward pressure on goods prices.”


Operating conditions across China’s manufacturing sector improved slightly at the end of the year, according to the latest Caixin China General Manufacturing PMI.

Companies reported the strongest increase in output for a year amid a renewed uptick in total sales. However, foreign demand remained lackluster, with export orders broadly stagnant.

Improved demand prompted a fresh rise in purchasing activity, but backlogs rose again amid a further drop in staffing levels, the report noted. At the same time, supplier performance deteriorated at a softer pace and inflationary pressures weakened. Average input costs rose at the slowest pace for 19 months.

The seasonally adjusted PMI to 50.9 in December rose from 49.9 in November. The rate of improvement was the strongest seen since June. Helping to lift the PMI reading was a stronger increase in production at the end of 2021.

Although the time needed for purchased items to be delivered to manufacturers increased again in December, there were signs that supply chains are beginning to stabilize, with average lead times lengthening at the slowest rate for nine months.

Average input costs rose at the weakest rate for 19 months in December, with the rate of inflation having fallen further from October’s recent peak. Panel members indicated that lower prices for some raw material helped to dampen cost inflation.

“Overseas demand remained sluggish because of the pandemic’s impact in foreign countries and rising logistics costs due to a shortage of containers,” Dr. Wang Zhe, senior economist at Caixin Insight Group, said. “Inflationary pressure eased as costs rose at a slower clip. The gauge for input costs remained in expansionary territory, but was lower than the previous month. Inventories of finished goods and raw materials both rose–the survey shows that some manufacturers with brisk sales began to actively replenish inventory.”


“The Vietnamese manufacturing sector ended 2021 in a steady growth phase,” Andrew Harker, economics director at IHS Markit, said. “Client demand continued to improve in December, but the ongoing circulation of the Covid-19 pandemic is likely restricting the pace of the recovery. One positive from the latest PMI survey was that firms were finally able to start rebuilding workforces…overcoming some of the difficulties attracting staff back to work following the recent wave of infections. While firms were generally confident about the outlook for output in 2022, the new Omicron variant adds a further layer of uncertainty for the months ahead.”

Cost inflationary pressures eased notably since November, in part reflecting signs that supply-chain delays were becoming less pronounced, IHS reported. The Vietnam Manufacturing PMI posted 52.5 in December, up from 52.2 in November and a third successive monthly improvement in business conditions.

The improvements in customer demand seen since the lifting of Covid restrictions at the start of the year’s final quarter continued to fuel expansions in new business. New export orders also rose, with the rate of increase quickening to an eight-month high.

Manufacturers continued to face input delivery delays, but the rate of lead times eased for the third successive month and was the weakest since April. There were some reports that the transportation situation was beginning to normalize, but raw material shortages and shipping delays continued to hamper efforts to secure inputs, the report noted.

Material shortages led to ongoing increases in input prices, while panelists also noted higher costs for oil and freight. That said, the rate of input price inflation eased in the month.


The health of the Indian manufacturing industry improved further in December, with continuing sharp growth in new work and production, according to IHS. Business confidence strengthened, but concerns surrounding supply-chain disruptions, Covid-19 and inflationary pressures dampened sentiment.

Although input costs rose sharply, the rate of inflation eased to a three-month low. In turn, companies held back on passing costs along to clients, with factory gate charges increasing at the slowest pace in over a year.

At 55.5 in December, the IHS Markit India Manufacturing PMI pointed to a robust improvement in overall operating conditions. Indian manufacturers reported higher prices paid for a wide range of items, including chemicals, foodstuff, electronic components, metals and textiles.

“The last PMI results of 2021 for the Indian manufacturing sector were encouraging, with the economic recovery continuing as firms were successful in securing new work from domestic and international sources,” Pollyanna De Lima, economics associate director at IHS Markit, said. “Higher sales underpinned a further upturn in production and companies carried on with their restocking efforts. Manufacturers were optimistic that output would continue to increase in 2022, but business sentiment was somewhat tamed by worries surrounding the path of the pandemic, inflationary pressures and lingering supply-chain disruptions.”


The Eurozone’s December PMI data showed a further easing of the supply chain crisis, with average lead times lengthening at the softest pace since February. Firms took advantage of this relative gain and added purchases to their inventories, outpacing by a notable margin the previous record set in November, IHS said.

However, manufacturing sector conditions continued to disappoint, with output growth remaining unchanged from November. Rates of input cost and output price inflation eased, but remained among the fastest ever seen by the survey.

The IHS Markit Eurozone Manufacturing PMI fell to 58 in December, down from 58.4 in November and its lowest reading in 10 months. Sector data revealed that consumer goods makers drove the sluggish improvement in manufacturing conditions. Italy again led broad euro area manufacturing growth, while France’s goods-producing sector remained the weakest-growing of the eight monitored eurozone nations.

“It has been an incredibly challenging period for eurozone manufacturers this second half of 2021, but the latest survey data hasn’t spoiled the festive cheer too much–we’re seeing some tentative, but very welcome signs that the supply chain crisis, which has plagued production lines all across Europe, is beginning to recede,” Joe Hayes, senior economist at IHS Markit, said.

“Although what gains to be had were only marginal, with shortages, port congestion and transport issues still at large, PMI data showed stocks of purchases rising at a survey-record rate in December,” Hayes said. “This should hopefully bring some much-needed relief to production schedules in the very near-term, which have been squeezed tight by input shortages…Easing inflation rates are again a welcome sign, but we’re still in hot territory. We’re now facing a fresh bout of economic uncertainty as the Omicron variant emerges in Europe. Covid-19-driven supply chain disruptions cannot be ruled out and therefore neither can further spikes in inflation.”


The Mexican manufacturing sector remained stuck in contraction at the end of 2021, IHS reported. Weaknesses on the demand side of the economy meant that factory orders declined further, resulting in another reduction in output. Ongoing issues on the supply side translated into severe delays in delivery times and a near-record increase in purchasing prices.

Additional cost burdens were shared with customers, as seen by a renewed and solid upturn in selling prices. Companies maintained a cautious approach towards stocks, with inventories of inputs and finished products continuing to fall.

The IHS Markit Mexico Manufacturing PMI was at 49.4 in December, unchanged from November and indicating a marginal deterioration in the health of the sector. Goods producers again noted that limited container availability, transportation problems and global shortages of raw materials drove severe delays in average lead times.

Problems in supply chains also meant that companies faced another monthly increase in input costs during December. The overall rate of purchasing price inflation was sharp and the third-fastest on record.

“In addition to being heavily impacted by supply-chain issues, companies continued to see their order books shrink as demand was dampened by a combination of market uncertainty, rising prices, reduced client requirements and an inability to distribute goods in a timely manner due to lingering problems sourcing raw materials,” De Lima said. “Panel members observed an unprecedented lengthening of delivery times during December and the third-sharpest increase in input prices on record…Worryingly, companies don’t expect supply-side problems and price pressures to dissipate in 2022. Business sentiment toward the year-ahead outlook for production fell to an eight-month low as said concerns mounted.”