ALL: Global Composite PMI

Wed Oct 04 10:00:00 CDT 2017

Actual Previous
Level 54.0 53.9

The pace of global economic expansion maintained August's near two-and-a-half year high in September with a reading of 54.0 for a second month. Both manufacturing and service sectors grew. Although the latter saw a marginal easing in its rate of increase, it still slightly outpaced the former (which saw a mild acceleration) for the sixth month running.

The latest expansion was also broad-based by manufacturing and services sub-sector, with output rising across all six categories covered by the survey. Three saw their rates of increase accelerate (consumer services, intermediate goods and financial services). The rest (business services, consumer goods and investment goods) all saw weaker growth than in August.

Economic activity rose across all of the nations for which all-industry data for September were available. Rates of expansion improved in the euro area, the UK and Russia, while Brazil returned to growth after contractions in the prior three months. Output increased at slower rates in the US, Japan and Australia.

Global all-industry employment rose again in September, taking the current sequence of job creation to 91 months. Although the rate of increase eased to its weakest since June, it remained among the best witnessed over the past decade. Staffing levels were raised in the US, the eurozone, Japan, the UK, Russia and Australia. In contrast, job cuts were signaled in Brazil for the thirty-first successive month.

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.