ALL: Global Composite PMI

Wed Sep 06 10:00:00 CDT 2017

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Level 53.9 53.5

August global composite PMI reading was 53.9, up from 53.6 in July as global economic growth gathered momentum with output rising at the quickest pace since April 2015. Rates of increase improved in the manufacturing and service sectors thanks to ongoing expansions at consumer, intermediate and investment goods producers and across business, consumer and financial services.

Developed nations continued to outperform (on average) relative to emerging markets. The euro area saw a further solid gain in economic output, with the pace of increase matching that registered in July. The upturn in the US economy gathered pace, as output growth picked up to its steepest since January. Japan also saw a mild acceleration. The UK expanded at a slightly weaker pace than in July, while growth slowed in Australia to a ten-month low. Among the emerging nations covered, economic output rose at accelerated rates in China (six-month high) and Russia (two-month high), but fell in India and Brazil

New business rose at the quickest pace in almost three years during August. This led to increased backlogs of work which expanded to one of the greatest extents in almost four years. The rate of growth in employee numbers hit a 77-month record. Price pressures strengthened slightly in August, with rates of increase in costs and output charges both accelerating. Input cost inflation reached a four-month high, whereas output prices rose to the greatest extent since May 2011.

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.