ALL: Global Composite PMI

Wed Feb 04 10:00:00 CST 2015

Actual Previous
Level 52.8 52.3

January global all industry output index reading was 52.8, up from December's 14-month low of 52.4. Although the headline index remained below its long run (53.9) and 2014 (54.0) averages, by turning higher in January it nonetheless halted the sequence of slowdown seen during the latter half of last year. Similar rates of expansion were signaled for manufacturing output and services activity, with both sectors also registering a mild uptick in growth. The main disparity in the latest activity numbers was between the emerging and developed nations, with the former seeing growth slow while the latter registered a faster pace of output expansion.

Ireland, Spain and the UK saw the quickest growth of economic output among the nations covered by the PMI surveys, with rates of expansion accelerating in the latter two. The US also ranked highly, but its pace of growth remained subdued compared to the highs scaled through much of last year. Output in Japan rose for the third straight month. The Eurozone, meanwhile, expanded at the quickest pace in six months during January. Alongside the strong growth in Ireland and Spain were a solid increase in German economic output and a return to expansion in Italy following December's growth hiatus.

In contrast, a contraction was registered in France. The Chinese economy continued to expand at a moderate pace in January, albeit an eight-month low, while India saw a mild growth acceleration. Trends were comparatively weaker in Russia and Brazil. Both saw contractions, with the rate of decline in Russia the steepest since May 2009.

Global all-industry employment rose for the fifty-ninth successive month in January. Job creation occurred in the Eurozone, the US, China, Japan, the UK, India and Brazil. Russia saw its sharpest rate of job shedding for five-and-a-half years. Price pressures remained subdued during the latest survey month.

JP Morgan Global Composite PMI gives an overview of the global manufacturing and services sectors. It is based on non-opinion based monthly surveys of over 16,00 purchasing executives from 32 of the world's top economies, including the U.S., Japan, Germany, France and China which together account for over 85 percent of global GDP. It reflects changes in global output, employment, new business, backlogs and prices. The Global Composite 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 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 and services sectors, 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 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 Composite PMI data give a detailed look at the manufacturing and services sectors, how busy it is and where things are headed. Since data are pooled from many countries which represent the lion's share of global manufacturing and services output, this indicator provides an advance look at the global private sector economy. Its sub-indexes provide a picture of global output, new orders, prices, employment and backlogs.