February global manufacturing PMI expanded for the twenty-seventh consecutive month. The rate of output growth accelerated to a six-month high as companies scaled up production to meet rising levels of new work and new export orders. The global manufacturing PMI climbed to 52.0 from 51.7 in January.
The US remained a prime driver of the global manufacturing upturn, as the US PMI rose to a four month high. Mexico also saw solid growth during the latest survey month. However, the Canadian PMI signaled contraction for the first time in almost two years, as demand was hit by reduced orders from the oil and gas sector. Growth was seen across much of the European manufacturing sector, with the strongest pockets of expansion registered in the UK, Ireland, Spain and East European nations such as Poland and the Czech Republic. Germany, the Netherlands and Italy grew while downturns continued in France, Austria and Greece. Completing the picture of modest broad-based expansion across the global manufacturing sector were the performances of the Asian nations. Mild growth was signaled in China, Japan, South Korea, Taiwan, India and Vietnam. However, Brazil, Turkey, Russia and Indonesia all reported deteriorations in business conditions in February.
Global manufacturing employment rose for the nineteenth successive month with the rate of jobs growth remaining consistent with those registered since September of last year. Among the largest manufacturing nations covered by the survey, staffing levels increased in the US, the euro area, the UK, Taiwan, South Korea and Brazil.
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.
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