ALL: Global Manufacturing PMI

Fri Jun 01 10:00:00 CDT 2018

Actual Previous
Level 53.1 53.5

Global manufacturing PMI reading was 53.1, the same pace as March's eight-month low. The main constraint on achieving faster output growth was a moderation in the pace of expansion of new business to the lowest since June 2017. A further factor was a slowdown in growth of new export orders to near-stagnation.

The best performing sub-sector was investment goods. This was the only industry covered to see an improved PMI level -- a five-month high and faster growth of both output and new orders. In contrast, the PMI readings for the consumer and intermediate goods categories fell to two- and 11-month lows respectively, as both sectors saw rates of expansion in production and new work ease.

The regional breakdown indicated that the U.S. outperformed the Eurozone for the second straight month. The U.S. is currently enjoying one of its best growth spells during the past four years so far in the second quarter. The Eurozone is still achieving a relatively solid pace of expansion, although the upturn has waned since the turn of the year and is currently the slowest for 15 months. Growth eased to a seven-month low in Japan and the China PMI also remained at a subdued level (albeit still above 50.0) and the downturn in South Korea also continued.

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.