JP Morgan's diffusion index for global manufacturing held steady in May at 49.6, just below 50 to indicate modest contraction. This is the ninth straight sub-50 showing for this index. Key negatives are contraction in new orders, at 49.3 for a 1 tenth decline, and especially contraction in new export orders, down 1.1 points to 47.3 to confirm the general contraction underway in cross-border trade.

Manufacturers nevertheless increased output slightly in the month to 51.5 though they slowed employment to virtually no change, at 50.1. The sample remains confident on the outlook though less so than in April with this index in May down nearly 2 points to 61.1 for the least positive reading so far this year. Helping optimism is slowing in inflation as both input costs and selling prices are now just below 50, readings that point to an end of global supply snags.

Underscoring the mixed results of May's report is the regional breakdown: orders in Asia are doing best while the US, the euro area, the UK and Brazil are slipping.

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.