Global economic growth lost further impetus at the end of the third quarter, as September saw the rate of output expansion slip to a nine-month low. Emerging markets were the main drag on headline global growth, whereas the performances of the developed economies held up better in comparison. The September composite PMI reading slid to 52.8 from 53.9 in August. Although tracking on a subdued growth rate trend, global economic output has nonetheless expanded in each of the past 36 months.
Slower increases were seen for both manufacturing output and service sector business activity during September. Among the developed nations, rates of all-industry output expansion held up well in the U.S. and the Eurozone. Both recorded solid increases, despite the pace of growth easing to three- and four-month lows respectively. The slowdown in the UK economy continued, while Japan registered only a modest and weaker increase in economic activity.
Within the euro area, output rose in Germany, France, Italy, Spain and Ireland. Although France was the only one of these nations to signal faster expansion, its rate of growth remained behind the others. Emerging markets generally performed poorly during September. The China all-industry output PMI remained below 50.0 for the second straight month, while Brazil remained in a severe downturn. Russia fared slightly better, seeing a marginal increase in economic activity following last month's contraction.
Global employment rose for the sixty-seventh month running in September. Although the rate of jobs growth eased slightly, it remained above the average for the current sequence of increase. Higher staffing levels were signaled in the U.S., the eurozone, Japan and the UK. Job losses were recorded in China, France, Italy, Brazil and Russia.
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.