Global economic growth accelerated slightly in July, arresting the recent easing trend. The JPMorgan Global All-Industry Output posted a reading of 53.4, up from June's five-month low of 53.1. Rates of output expansion ticked higher in both the manufacturing and service sectors, with faster growth registered at service providers. The increase in manufacturing production may have been stronger than signaled had it not been for the ongoing downturn in Asia (a trend not repeated in that region's service economy).
National PMI data indicated that the steepest gains in economic activity were in Spain, the UK and the US. While growth decelerated in the UK, rates of increase ticked higher in both the US and Spain. The recovery in the euro area continued at the start of the third quarter with solid gains in output signaled in both the manufacturing and service industries, with the manufacturing sector shouldering a series-record rate of contraction in Greece. By far the worst performance was in Brazil, where all-industry output fell at one of the sharpest rates in the (Brazil) survey history. Although the downturn in manufacturing production eased in July, service sector business activity fell at a record equaling pace.
Global employment rose again, taking the current sequence of job creation to 65 months. The rate of increase was also marginally better than in the prior month. Price pressures in the global economy remained mildly towards the upside in July.
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.
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