Global manufacturing PMI posted 49.6, down 0.4 points from November's 50.0. This signals contraction in operating conditions; however, regional differences remain apparent.

There was a slight decline in new orders (49.5), manufacturing output (49.2), employment (49.4) and stocks of purchases. Further decline was seen in new export orders (48.2). Output stagnated in the last quarter while falling slightly in December.

The mixed report is reflected regionally with India, Philippines, Spain, Greece, Taiwan and Canada reporting expansion in the order of strongest to weakest. Spain and Greece went contrary to the decline seen in the Eurozone area, where contraction was the steepest in 14 months. France, Germany and Austria saw the steepest declines in the Eurozone area.

The US and UK also posted steeper contractions with the US hitting an 18-month low and the UK hitting an 11-month low.

Across Asia, China registered a slight uptick, but Japan fell slightly.

Business optimism dipped to a 3-month low after November's 6-month high with input cost inflation going up again, to a 4-month high. Selling price inflation eased at least, reaching a 9-month low in December.

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.