ALL: Global Composite PMI

Thu Sep 03 10:00:00 CDT 2015

Actual Previous
Level 53.7 53.4

August composite global PMI was unchanged from July's reading at 53.7. The marked disparity between the performances of the developing and emerging nations continued during August. Activity declined, albeit only slightly, across the emerging markets for the second time in the past three months, led by a modest fall in industrial sector output. Composite PMI output indices for China and Russia both fell back into contraction territory, while the Brazilian economy remained in a severe downturn. The main emerging market bright spot was India, where growth accelerated to a five-month high.

The rate of output expansion across the developed nations meanwhile ticked up to its quickest since April. The US recorded a further marked increase in economic activity, but the pace of expansion remained below rates seen through much of the first half of the year.

The recovery in the Eurozone economy also improved, with growth reaching a four-year high. The expansion in the currency union reflected strong growth in Germany, Italy, Spain and Ireland. In contrast, growth in France slowed and was close to stagnation. Elsewhere in the developed world, the UK reported a marked increase in output, but the pace of expansion eased to its slowest since May 2013. Japan saw its rate of growth improve to a 19-month high, but remain below the global average.

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.