ALL: Global Manufacturing PMI

Wed Jul 01 10:00:00 CDT 2015

Actual Previous
Level 51.0 51.2

The global manufacturing sector remained subdued at the end of the second quarter, with June seeing a mild deceleration in the rate of output expansion to a near two-year low. The global manufacturing PMI slipped to 51.0 in June, its lowest reading since July 2013. Over the second quarter, average rates of expansion in both global manufacturing production and new orders were the weakest since Q2 2013, further highlighting the generally subdued performance of the sector in recent months.

However, output advanced for the thirty-first consecutive month in June. Growth was again recorded (on average) in North America and Europe, in contrast to a mild decrease in production in Asia. The expansions in the US and the UK (among the leading lights of global manufacturing earlier in the year) cooled in June, with production growth at a 17-month low in the US and 26-month low in the UK. Japanese output edged higher for the second successive month, while conditions continued to improve in the euro area.

Among the main emerging markets, output fell slightly in China and Russia, but rose in India, Mexico and Vietnam. Brazil's severe downturn in manufacturing production continued. Although new business increased at the second slowest pace in nearly two years, there was better news on international trade flows.

The level of new export business rose following a brief growth hiatus in May, with increases in the Eurozone, China, Japan, India, Mexico and Eastern Europe. New exports fell in the US, the UK, Russia, Taiwan, South Korea, Turkey, Indonesia, Vietnam and Brazil.
Manufacturing employment rose for the twenty-third successive month in June, with the rate of job creation in line with the average during that sequence.

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.