ALL: Global Composite PMI

Fri Nov 04 10:00:00 CDT 2016

Actual Previous
Level 53.3 51.7

October composite PMI saw a solid improvement in the rate of global economic expansion with a reading of 53.3, up from 51.7 in September. Output rose at the quickest pace in almost a year, driven by the sharpest growth in new orders over the same period.

Manufacturing production and service sector business activity expand at the quickest rates since July 2014 and November 2015 respectively. Manufacturers reported the faster pace of growth. Sub-sector PMI data also reinforced the picture of broad-based improvement in global economic conditions. Output was faster at producers of consumer, intermediate and investment goods. Activity growth also gathered pace at business and consumer service providers. The only industry to buck the general trend of firmer output growth was financial services, where the rate of increase slowed from September's nine-month high.

National all-industry output PMI data were also broadly positive in October. Growth accelerated to an 11-month high in the US, a nine-month peak in the euro area and fastest since March 2013 in China. The UK, India and Russia also saw quicker expansions, while Japan returned to growth territory following back-to-back contractions in August and September.

Global employment rose again in October. Although the rate of job creation remained mild, it was nonetheless the quickest in three months. Staffing levels were raised in the US, the eurozone, Japan and the UK. However, further job losses were recorded in China, Russia and Brazil, while no change in employment was signaled for India.

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.