ALL: Global Composite PMI

Tue Apr 05 10:00:00 CDT 2016

Actual Previous
Level 51.3 50.6

March global composite PMI expanded for the first time in four months to a reading of 51.3, up from February's 40 month low of 50.8. Output growth accelerated in both the manufacturing and service sectors. New work rose at the slowest pace since December 2012, a trend that will need to strengthen in coming months to ensure output growth gains further traction. Even after the mild improvement in its level during March, the average for the headline index over quarter one as a whole (51.6) was the weakest since the final quarter of 2012.

National PMI data signaled that output growth edged higher in the US, the Eurozone, the UK and Russia. Japanese economic output stagnated, with little change seen in either manufacturing production or service sector business activity. The severe downturn in Brazil continued, with the pace of contraction easing only moderately from February's series-record.

Global employment rose for the seventy-third successive month in March. However, the rate of increase eased to a five-month low, reflecting weaker jobs growth at service providers and further cuts in manufacturing. Employment rose in the US, the Eurozone and the UK, in contrast to job losses in Japan, 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.