ALL: Global Manufacturing PMI

Thu Feb 01 10:00:00 CST 2018

Actual Previous
Level 54.4 54.5


January global manufacturing PMI reading was 54.4, down from 54.5 in December. The rates of growth in output and new orders stayed near to highs that were reached prior to the turn of the year. Growth remained broad-based in consumer, intermediate and investment goods industries and across almost all of the nations covered by the survey.

The euro area remained the principal growth engine of global manufacturing expansion even though the Eurozone PMI slipped to a three-month low, from December's record high. Solid expansions were still registered across all of the member nations within the euro area covered by the survey. The US PMI improved to a 34-month high. Accelerations were signaled in Mexico and Canada, while Brazil saw further expansion (albeit slower than December). Asia manufacturing saw rates of expansion picking up in Japan, Taiwan, Vietnam, Thailand and Myanmar, and holding steady in China. South Korea returned to growth following a minor contraction at the end of 2017.

Global manufacturing production was underpinned by rising new order volumes. Inflows of new work continued to test capacity, leading to rising backlogs of work and encouraging further job creation. Employment rose in almost all of the nations covered, the exceptions being China, Indonesia, South Korea, Russia and Thailand. To meet rising output needs, firms also increased their purchasing activity to the greatest extent in almost seven years.

Input prices and output charges both accelerated during January. Selling price inflation was the second-highest in 80 months, bettered only during that sequence by November of last year.

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.