ALL: Global Manufacturing PMI

Mon Feb 02 10:00:00 CST 2015

Actual Previous
Level 51.7 51.6

The global manufacturing sector posted 51.7 in January, up slightly from 51.5 in December. Rates of expansion in production and new orders ticked slightly higher in January, but remained below their respective long-run averages. The biggest movement was in the trend for input prices, which fell at the sharpest pace in two-and-a-half years.

The US PMI signaled a further modest growth outcome, although the pace of expansion remained well below last year's highs. Canada, meanwhile, saw its PMI dip to a 21-month low. Asia saw growth continue in Japan manufacturing, broad stagnation in China and mild expansions in South Korea, Taiwan, India and Vietnam. The Indonesia PMI remained below the 50.0 mark. The Eurozone and UK started 2015 on slightly firmer footings than they ended last year, with PMI readings ticking higher for both.

Among the Eurozone nations, growth was signaled in Germany, Spain, the Netherlands and Ireland. France contracted (albeit at a slower pace), the downturns in Greece and Austria accelerated, and Italy stagnated. Eastern Europe fared well in comparison, with the Czech Republic and Poland rising to the top of the Global PMI league table. Elsewhere, the downturn in Russia deepened, Turkey stagnated, Switzerland fell into contraction and Brazil eked out mild growth.

Global manufacturing employment rose again in January, extending the current sequence of jobs growth to 18 months. Workforce numbers were raised in the US, the Eurozone, Japan, the UK, India, South Korea, Taiwan, Turkey and Vietnam. The slump in oil prices drove down manufacturing input costs at the fastest pace since July 2012. Global factory gate selling prices also edged lower for the second successive month. The steepest declines in purchase prices were seen in the Eurozone, China, the UK, Switzerland, Taiwan, Vietnam and South Korea. In contrast, Japan and Russia saw marked increases.

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.