ALL: Global Manufacturing PMI

Tue Jan 02 10:00:00 CST 2018

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Level 54.5 54.0

December's global manufacturing PMI ended 2017 at a near seven year high of 54.5, up from 54.1 the month before thanks to accelerated expansion in both output and new orders. The PMI has signaled expansion in each of the past 22 months.

The consumer, intermediate and investment goods sectors expansion accelerated in all three. The strongest pace of improvement was in the intermediate goods category, followed closely by investment goods, with PMI readings at eighty-two month highs in both cases. Growth was mild in comparison in the consumer goods sector
Growth was again faster (on average) in developed nations compared to emerging markets. The euro area remained the strongest performing region, with its PMI hitting a series-record high. Rates of expansion improved in the US (33-month high) and Japan, but eased in the UK. PMI readings hit a three-month high in China, surged to a five-year high in India, five-month high in Russia and remained in expansion territory in Brazil.

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.