ALL: Global Composite PMI

Wed May 06 10:00:00 CDT 2015

Actual Previous
Level 54.2 54.8

Global economic output expanded for the thirty-first successive month in April, underpinned by a further solid increase in incoming new orders. The JPMorgan Global All-Industry Output Index posted 54.2 in April, down 0.6 points from March's six-month high, but still a level indicative of a solid increase in output. The slowdown at the headline level was mainly centered on the manufacturing sector, where the rate of expansion eased to a 21-month low. Although growth also weakened slightly in the service sector, the pace of increase in business activity remained close to March's six-month high.

Global all-industry employment continued to rise in April, with the pace of jobs growth improving to a ten month high. Alongside the ongoing upturn in economic activity the increase in staffing levels also reflected a further expansion in backlogs of work. On the price front, average input prices rose at the joint-quickest pace since October of last year, albeit at a slower rate than the long-run survey average. Meanwhile, average output price inflation accelerated to a seven-month peak.

National data indicated that the US and the UK remained prime drivers of the global economic upturn. Although US output growth eased to a three-month low with slowdowns at both manufacturers and service providers it remained well above the global average. Employment in the US meanwhile rose at the quickest pace in ten months. Weaker growth in UK manufacturing production was offset by a firmer expansion in the service sector, leaving the overall rate of increase close to March's seven-month peak. Further strong job creation was again seen in the UK as well.

JP Morgan Global Composite PMI gives an overview of the global manufacturing and services sectors. It is based on 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.