ALL: Global Manufacturing PMI

Mon Jun 01 10:00:00 CDT 2015

Actual Previous
Level 51.2 51.0

May manufacturing PMI edged up to 51.2 from April's 21 month low of 51.0. There were mild improvements in both the rates of expansion in global manufacturing production and new orders. However, the trend in international trade flows remained weak, as levels of new export business decreased for the first time in almost two years.

May data also saw rates of growth in manufacturing production and new orders both accelerate from April's recent lows. Spain, Italy and Vietnam were at the top of the PMI output growth league table. The US also remained a prime driver of the expansion, despite seeing its rate of output growth ease to a five-month low. Japanese production returned to expansion following April's decline, whereas China slipped into contraction for the first time in the year-to-date.

The recovery in the eurozone was ongoing in May, although the rate of expansion was a shade weaker than in April. Alongside the robust growth in Spain and Italy, production increased in the Netherlands, Germany and Austria. France contracted again, but the rate of decline eased sharply. Elsewhere in the global manufacturing sector, growth slowed to a moderate pace in the UK, while India, Poland and the Czech Republic recorded robust expansions. Contractions were seen in Russia, Taiwan, South Korea and Brazil.

J.P. Morgan Global Manufacturing PMI gives an overview of the global manufacturing sector. It is based on 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.