November's global composite PMI climbed to a three month high with a reading of 53.7. Rates of output growth accelerated in both the manufacturing and service sectors, with the steepest expansion seen in the latter. Services activity rose at the fastest pace since August, while manufacturing production registered its steepest gain in eight months.
Developed markets led the expansion. Output growth reached a six month high in the US, three-month peak in the euro area, four-month high in the UK and steadied at a modest pace in Japan. Within the Eurozone, expansions were seen across the big-four nations of the currency union (Germany, France, Italy and Spain). In contrast, the readings for China, India and Russia were only slightly above the stagnation mark. The downturn in Brazil continued.
Underpinning the latest expansion of economic activity was a further uptick in the level of incoming new work, with the pace of improvement in new order inflows also reaching a three-month peak. Growth accelerated in the service sector, but slowed at manufacturers.
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.
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