The following is an extract from S&P Global Market Intelligence's latest Monthly PMI Bulletin. For the full report, please click on the 'Download Full Report' link.

The global downturn persisted for the fifth straight month in December 2022 but at a slower rate compared to November. Underlying demand conditions deteriorated, however, with higher prices remaining a key dampener on spending despite signs of cooling inflationary pressures.

The J.P.Morgan Global Composite Output Index - produced by S&P Global - posted 48.2 in December, up from 48.0 in November. This marked the fifth consecutive month of global contraction, albeit at a slower pace compared to November.

The deceleration of the global contraction was supported by improving supply conditions in December, especially in the manufacturing sector. Fewer incidences of supply delays were reported by panel members, with reduced energy market concerns also playing a role. However, the outlook remains uncertain, with weak demand conditions remaining at the heart of the slowdown. Global new orders lowered for a fifth month in December, dropping at the steepest rate since 2009, barring pandemic lows, boding ill for output in the coming months.

Meanwhile despite the easing of supply constraints, price pressures remained severe enough to draw concerns, with the number of companies reporting higher prices to have caused a drop in orders spiking to an all-time survey high. These price concerns included central bankers who remain in pursuit of inflation, now focusing on sticky service sector cost increases. This suggest that the double whammy of tightening financial conditions and wilting demand may persist into the start of 2023.