Global economic activity rose at the fastest pace for six months in March, underpinned by an equally strong rate of growth in incoming new orders. The ongoing expansion encouraged companies to further increase employment, as the pace of job creation accelerated to its highest since June of last year.
The JPMorgan Global All-Industry Output Indexwhich is produced by JPMorgan and Markit in association with ISM and IFPSM registered 54.8 in March, up from 53.9 in February. The index has now signaled expansion in each of the past 30 months.
The services sector continued to lead the expansion in global economic output in March. Growth of service sector business activity hit a six-month peak. Although the rate of increase in manufacturing production was the fastest since last August, it was nonetheless weaker than that signaled for services output for the eleventh month running.
The expansion was led by the US, where growth hit a seven-month high, and the UK (which saw output rise at the quickest rate since last August). There were also further signs of the Eurozone recovery gathering pace.
Within the Eurozone, economic output rose at the sharpest clip since April 2014. Ireland and Spain continued to lead the way, backed up by a fast improving German economy where growth accelerated to an eight-month high.
Rates of expansion in Italy and France were modest in comparison (even after growth in Italy accelerated to an eight-month peak). March was nonetheless the second month in a row that economic activity rose across each of the big-four Eurozone nations.
The performances of the economies in Asia were generally subdued in comparison. Growth in China remained below its long-run trend level, there was a mild deceleration in India and Japan contracted for the first time in five months.
Elsewhere in the global economy, Brazil saw output decrease at the sharpest pace since April 2009, while the downturn in Russia remained marked.
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.