ALL: Global Composite PMI

Wed Nov 04 10:00:00 CST 2015

Actual Previous
Level 53.4 52.8

October PMI composite surveys accelerated modestly to a reading of 53.4, above the nine-month low of 52.8 registered in September. Among the nations for which October data were available, output growth was led by Ireland, the UK, the US and Spain. Rates of expansion accelerated in both the UK and Spain, but held steady at September's three-month low in the US and eased to the weakest since February 2014 in Ireland.

Solid and accelerated growth performances were also registered in Germany, France and Italy. Combined with the outcomes for Ireland and Spain, this took the rate of increase in Eurozone economic output up from September's recent low. China, in contrast, broadly stagnated during October, as output growth in the resilient service sector was offset by a contraction (albeit slower) at manufacturers. Elsewhere in Asia, Japan and India both recorded stronger rates of expansion in economic activity.

Growth of incoming new orders also ticked higher in October, with faster gains registered in both the manufacturing and service sectors. Ongoing growth of new business led to a slight increase in backlogs of work and further job creation. Employment rose for the sixty-eighth successive month in October, although the pace of expansion eased to the weakest during the year so far. Workforce numbers increased in the US, the Eurozone and the UK, were broadly unchanged in India, but fell marginally in both China and Japan. Price pressures remained subdued in October.

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.