ALL: Global Manufacturing PMI

Mon Nov 02 10:00:00 CST 2015

Actual Previous
Level 51.4 50.6

The global manufacturing sector continued to be weighed down thanks to the ongoing slump in emerging Asian markets that continued to offset growth in many of the major developed industrial nations. The October reading was 51.4, up from 50.7 in September.

The developed world once again led the manufacturing upturn, as emerging markets remained in recession for a seventh successive month. The UK moved to the top spot in the PMI growth rankings, as a sharp rise in the UK Manufacturing PMI to a 16-month high indicated a tentative revival following the mid-year slump. Meanwhile, stronger export growth and robust domestic demand helped push the US into joint-second place, alongside Italy, with the PMI reaching a six-month high. Signs of improvement were also evident in Japan, where growth hit a one-year high. The Eurozone saw a modest acceleration, with expansions registered in almost all of the euro area nations covered by the survey. The exception was Greece, which nonetheless saw a further easing in its rate of contraction.

Growth remained strong in both the Czech Republic and Poland. Apart from these two nations, the best performances were seen in India, Vietnam and Russia, which all hovered just above the stagnation mark. Downturns continued in China, Taiwan, South Korea, Indonesia, Malaysia and Turkey.

Global PMI indices for manufacturing output and new orders both signaled expansion and rose to five- and seven-month highs respectively. Although the trend in global trade flows remained tepid, growth of new export orders recovered slightly following contractions in the prior three months.

Manufacturing employment edged higher in October, with jobs growth the fastest in four months. Among the largest industrial nations, workforce numbers were raised in the US, the Eurozone, Japan and the UK, but lowered in China, France and South Korea. Price indicators remained on the downside in October,

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.