July growth in the global manufacturing sector remained lackluster at 51.0, unchanged from June and its weakest reading during the past two years. Manufacturing output rose for the thirty-second successive month in July, with the rate of expansion ticking higher from June's recent low.
The strongest expansions in production were in the Czech Republic, the Netherlands, Italy and Poland. The U.S. also remained close to the top of the global manufacturing output growth league table, seeing its rate of expansion pick up to a three-month high. The Eurozone's manufacturing sector largely shouldered the immediate impact of the Greek debt crisis, as manufacturing output in the region expanded at the fastest pace during the past 14 months. Alongside the robust growth in the Netherlands and Italy, production also rose in Germany, Spain and Austria. France reported a mild contraction. The impact on the Greek manufacturing sector was substantial, however, with rates of decline in output, new orders and employment accelerating sharply to the steepest in the (Greek) survey history.
The downturn in Asia continued, with contractions in China, Taiwan, South Korea, Indonesia and Malaysia offsetting solid expansions in Japan and India. Production also fell in Brazil and Russia. Underpinning the increase in output was further growth in new order inflows. However, the pace of improvement in new business slowed as new export orders declined for the second time in the past three months. New export business decreased in China, Germany, France, the UK, Taiwan, South Korea, Greece, Turkey, Indonesia, Vietnam, Russia and Brazil, and was little changed in the U.S. and Malaysia.
Manufacturing employment rose for the twenty-fourth straight month in July. However, the rate of jobs growth was marginal and broadly in line with the average for that sequence. Staffing levels rose in the U.S., the Eurozone, Japan, the UK, Mexico, Taiwan, Turkey and Vietnam. Headcounts were lowered in Russia, Switzerland, China, India, South Korea, Indonesia, Brazil and Malaysia.
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.