Manufacturing global growth continued to moderate at the end of 2014, with production and new orders both rising at the slowest pace in almost one-and-a-half years. December's reading was 51.6, down from 51.8 in November and its lowest since August 2013. Global manufacturing production rose for the twenty-sixth successive month. North America remained the prime driver of the expansion, as growth stayed relatively muted in both the Eurozone and Asia.
There were also signs of further slowing in North America, however, as rates of output expansion eased in both the U.S. (11-month low) and Canada (three-month low). The trend held up better in Mexico, with growth accelerating to a two-year high.
Among the Asian manufacturing economies, Indonesia and South Korea reported contractions of production, while China stagnated. India continued to perform strongly, with growth hitting a two-year peak, and a modest expansion was also seen in Japan (according to flash PMI data).
Eurozone manufacturing production rose only marginally and at the weakest pace during the current one-and-a-half year sequence of expansion. Solid growth in Ireland, Spain and the Netherlands, alongside mild expansions in Germany, Austria and Greece were partly offset by accelerated rates of contraction in France and Italy. Elsewhere, growth slowed in the UK and Turkey, Russia stagnated and Brazil contracted.
Global manufacturing employment rose at a steady pace with job creation in the U.S., the Eurozone, Japan, the UK, Canada, Mexico, South Korea, Brazil, Poland, the Czech Republic and Turkey.
J.P. Morgan Global Manufacturing PMI gives an overview of the global manufacturing sector. It is based on non-opinion based monthly surveys of over 10,000 purchasing executives from 32 of the world's leading economies, including the U.S., Japan, Germany, France and China which together account for an estimated 89 percent of global manufacturing output. It reflects changes in global output, employment, new orders and prices. The Global Manufacturing PMI is seasonally adjusted at the national level to control for varying seasonal patterns in each country and is produced by J.P. Morgan and Markit Economics in association with ISM and the International Federation of Purchasing and supply Management (IFPSM).
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. The J.P. Morgan Global Manufacturing PMI provides advance insight into the global manufacturing sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of global markets. The stock market likes to see healthy economic growth because that generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.
The J.P. Morgan Global Manufacturing PMI data give a detailed look at the manufacturing sector including the pace of manufacturing growth and the direction of growth for this sector. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. In addition, its sub-indexes provide a picture of output, employment, new orders and prices.