ALL: Global Manufacturing PMI

Mon May 04 10:00:00 CDT 2015

Actual Previous
Level 51.0 51.8

The April survey signaled a further growth slowdown in Manufacturing. The rates of expansion in both production and new orders eased to the weakest since mid-2013. The April reading was at a 21 month low of 51.0. Manufacturing production growth also eased to a 21-month low in April. The slowdown was broad-based. Rates of expansion in previous standout performers the U.S. and the UK were at four-and five month lows respectively, China stagnated and Japan, South Korea and Taiwan all contracted.

Growth in the Eurozone manufacturing sector held up comparatively well. Although the rate of expansion eased slightly over the month, it was still close to March's ten-month high and above the global average for the second straight month. Ireland, Italy, Germany and Spain all reported solid expansions in manufacturing output, while Austria returned to growth following a sequence of contraction. In contrast, the downturns in the French and Greek manufacturing sectors continued, with rates of contraction accelerating to the fastest since December 2014 and June 2013 respectively.

Global manufacturing new orders expanded at the weakest pace in almost two years. This partly reflected a near-stalling of growth in incoming new export business. New export orders decreased in the US, the UK, France, Canada, Taiwan, South Korea, Turkey, Indonesia, Brazil and Greece. China and Japan reported only minor rises. April data signaled an increase in global manufacturing employment for the twenty-first successive month in April. However, the rate of job creation has remained, at best, only moderate.

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.