ALL: Global Composite PMI


Mon Feb 05 10:00:00 CST 2018

Actual Previous
Level 54.6 54.4

Highlights

Global economic activity growth climbed to a 40-month high of 54.6, up from 54.3 in December. Output increased across the six categories of manufacturing and service sector activity tracked and in almost all of the national PMI surveys available at the time of publication.

Manufacturing production increased at a pace matching December 2017's near seven-year high, while output growth in the service sector improved to the fastest in three months. Economic activity increased at faster rates in four of the six sub-sectors covered by the survey (consumer and intermediate goods as well as consumer and financial services). Output also expanded in the business services and intermediate goods categories.

National PMI data pointed to a broad-based upturn in world economic activity, with all of the nations for which all-industry data are available registering expansions. The euro area remained a principal growth engine. Eurozone output rose at the quickest pace in almost 12 years, with growth accelerating in Germany, Italy and Spain. Rates of expansion also strengthened in China and Japan, while Brazil returned to growth following recent contractions. Slower rates of increase were signaled for the US, the UK, India, Russia, Australia and Ireland.

Definition
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).

Description
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.