ALL: Global Manufacturing PMI

Fri Apr 01 10:00:00 CDT 2016

Actual Previous
Level 50.5 50.0

The global manufacturing sector remained subdued in March. Although the headline index and those tracking output and new orders all edged higher, their respective levels were indicative of only mild growth at best. The global manufacturing PMI climbed to a reading of 50.5 from 50.0 in February. The average PMI reading during the first quarter of 50.4 was the weakest since the second quarter of 2013.

Manufacturing production rose marginally underpinned by a modest improvement in new order inflows. However, the trend in international trade flows deteriorated further, as highlighted by a second successive monthly decrease in new export orders.

National PMI data suggested that conditions remained lackluster in the three main industrial regions covered by the survey. Manufacturing production was near-stagnant in Asia, as marginal increases in China, Taiwan, Indonesia and Vietnam were offset by contractions in Japan, South Korea and Malaysia. The Americas fared slightly better. Growth improved to a four-month high in Mexico, while output expanded in Canada following a seven-month sequence of contraction. The US eked out further production growth, although the rate of increase was unchanged from February's 28-month low. The downturn in Brazil continued, although the pace of contraction slowed. Almost all of the Eurozone nations for which data are collected reported higher output in March. The sole exception was Greece.

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.