ALL: Global Manufacturing PMI

Mon Oct 02 10:00:00 CDT 2017

Actual Previous
Level 53.2 53.1

Global manufacturing continued to expand at a stable pace, matching August's reading of 53.2 in September a 75 month high. Both output and new orders continued to increase at one of the best rates over the past three years.

PMI readings for the worldwide consumer, intermediate and investment goods sectors signaled further expansion in September. Rates of improvement remained broadly similar across all three. Growth accelerated at intermediate goods producers, but slowed in the consumer and investment goods categories.

National PMIs expanded in almost all of the countries covered in the survey. Growth accelerated in the Eurozone, the U.S. and Japan but slowed slightly in China, the UK and Taiwan. South Korea moved back into expansion territory. The upturn in the euro area was again led by Germany, the Netherlands and Austria.

Manufacturing production was underpinned by further increases in both total new orders and international trade volumes. The continued upturn in new order inflows exerted further pressure on capacity, leading to one of the steepest increases in backlogs of work over the past three-and-a half years. This in turn encouraged manufacturers to raise employment to the greatest extent since May 2011. Staffing levels were increased in almost all of the nations covered by the survey. Notable exceptions were job losses in China, South Korea and Brazil.

Price pressures intensified in September. Input cost inflation rose sharply to a seven-month high, a key factor underlying the steepest increase in selling prices since May 2011. Companies linked higher purchasing costs to rising commodity prices and increased supply-chain pressures (reflected in a steep lengthening of average vendor lead times.

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.