ALL: Global Composite PMI

April 5, 2018 10:00 CDT

Actual Previous
Level 53.3 54.8

Following slowdowns in both services and manufacturing growth in March, the composite reading slipped to 53.3, down from 54.8 in February. The average reading over the opening quarter (54.2) was still the best outcome since quarter three of 2014. The slowdown was reflective of a general easing in the rates of expansion across much of the global economy. On a sector basis, manufacturing eased to an eight-month low and service sector business activity rose to the weakest extent in almost a year-and-a-half.

Rates of increase in output also moderated in five of the six sub-sectors covered by the survey (business services, consumer goods, consumer services, financial services and intermediate goods). Only the investment goods category saw production rise at a stronger pace.

National PMI data also indicated widespread growth deceleration. Although all-industry output rose in all of the countries covered, only India (which saw a return to expansion) and Australia (where growth accelerated to a three-month high) saw improved trends in output.

Rates of expansion eased in the US (two-month low), the Eurozone (14-month low), China (four-month low) and Japan (17-month low). Growth in the UK was the weakest during the current 20-month sequence of increase and also moderated in Brazil (two-month low) and Russia (five month low).

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.