September global manufacturing sector with a reading of 50.6, continued to record lackluster growth with rates of expansion in output and new orders edging lower and remaining marginal overall. It was the lowest reading since July 2013. The subdued conditions also filtered through to the labour market, as employment fell for the first time since July 2013.
The U.S. and the European Union (EU) remained positive contributors to global manufacturing growth in September. Within the EU, almost all of the nations covered by PMI surveys reported expansions (the sole exception being Greece). The strongest improvements were seen in the Czech Republic, Ireland and the Netherlands, while France returned to growth following contractions in the prior two months.
The Asia region remained one of the weaker points in the global manufacturing sector during September. The China PMI slipped to a six-and-a-half year low of 47.2. Contractions were also signaled in South Korea, Taiwan, Indonesia, Vietnam and Malaysia. Although Japan and India were plus points for the region, rates of expansion in these two nations slowed to three and seven-month lows respectively. Brazil and Greece, meanwhile, remained in severe downturns. Contractions were also signaled by the Russian, Canadian, Turkish and Swiss PMI indices.
Global manufacturing production rose at the slowest pace in almost two-and-a-half years in September, while growth of new orders remained in line with the lows seen during the second quarter. International trade flows continued to weaken, with new export business falling for the third straight month.
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.