Tuesday, September 7, 2010

Global Manufacturing PMI at 9 Month Low (Chart) *Expanding at slower rate*


Global Manufacturing PMI Dips -0.5%

Global Manufacturing PMI at 9 Month Low, Expanding at Slower Rate

The JPMorgan Global Manufacturing PMI (Purchasing Managers' Index) decreased -0.5% to 53.8 in August. This was the fourth consecutive monthly decrease since the April 2010 peak of 57.8. The August -0.5% decrease was the smallest of the last four months, following the -0.7%, -2.0%, and -0.8% decreases in July, June, and May, respectively.

The JPMorgan statement about the August 2010 Global Manufacturing PMI: "PMI data signalled that the recovery in global manufacturing production extended into its fifteenth consecutive month in August. However, there were further signs that the upturn in the sector was losing momentum, reflecting slower growth of new orders and a waning boost from inventory rebuilding.."

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "August PMI data suggest that the manufacturing recovery slowed further from the boom rates seen earlier in 2010, as the boost from inventory rebuilding waned and global trade flows remained muted. However, signs are that the slowdown in Q3 will not be too excessive. While conditions will continue to cool as the year progresses, there looks to be sufficient traction remaining to sustain the recovery."

Below is a chart of the latest 24 months of the Global Manufacturing PMI from September 2008 through the latest month reported, August 2010. The PMI has been greater than 50, indicating global manufacturing is expanding, since June 2009 - 15 consecutive months. As can be seen on the chart below, the PMI bottomed in December 2008 at 33.7, as did the USA Manufacturing PMI at 32.5. The PMI then increased significantly through August 2009 to 53.1. The PMI eventually continued upwards to a peak of 57.8 in April 2010. Four consecutive monthly declines have ensued through this latest August 2010 decline. However, the four consecutive monthly declines still indicate global manufacturing is expanding, just at a slower rate.

The 12-month (1 year) moving average of the Global Manufacturing PMI is 55.2, which the August PMI is below at 53.8. The 24-month (2 year) moving average of the Global Manufacturing PMI is 48.5, which the August PMI is still well above at 53.8. The PMI is a percentage - not a total. More about the PMI below the chart.

*Data courtesy of the Institute for Supply Management & JPMorgan*

About The PMI
The Global Report on Manufacturing is compiled by Markit based on the results of surveys covering over 7,500 purchasing executives in 29 countries. Together these countries account for an estimated 90% of global manufacturing output. Questions are asked about real events and are not opinion based. Data are presented in the form of diffusion indices, where an index reading above 50.0 indicates an increase in the variable since the previous month and below 50.0 a decrease. 50.0 = no change level.

Data sources: Country % share of global GDP
United States 28.8
Japan 12.8
China 6.5
Germany 5.2
United Kingdom 4.3
France 3.8
Italy 2.9
Brazil 2.1
India 2.0
South Korea 1.9
Spain 1.8
Mexico 1.7
Australia 1.3
Netherlands 1.1
Russia 1.1
Turkey 1.0
Taiwan 0.8
Switzerland 0.7
Poland 0.6
Austria 0.6
South Africa 0.5
Denmark 0.4
Greece 0.4
Israel 0.4
Ireland 0.3
Singapore 0.3
Czech Republic 0.2
New Zealand 0.2
Hungary 0.2

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