Tuesday, October 12, 2010

Global All-Industry Output Index at 10-Month Low (Chart) "Global recovery lost further traction"


Global All-Industry Output Index Dips -1.3%

Global All-Industry Output Index at 10-Month Low, Global Recovery Lost Further Traction

Official Statement The JPMorgan statement about the September 2010 Global All-Industry Output Index: "The global economic recovery downshifted again in September, as rates of expansion eased in both the manufacturing and service sectors. At 52.6, down further from April's post-recession high, the JPMorgan Global All-Industry Output Index posted its lowest reading since last November. The average index reading for Q3 2010 as a whole was the weakest since Q4 2009."

David Hensley, Director of Global Economics Coordination at JPMorgan, said: ""The global recovery lost further traction in September, with business activity rising at the slowest pace in ten months. The activity index is pointing to a downshift in global GDP growth to somewhere in the region of 2.25% q/q saar. The slowdown remains broad-based, with both manufacturers and service providers seeing weaker growth. The signs point to continued soft growth through year's end."
Cycle History The data on the chart below is limited to the latest 13 months ending August 2010. The current September Global All-Industry Output Index of 52.6 is down -5.1 and -8.8% from the post-recession peak of 57.7 in April 2010. The current Index  is up +0.9 and +1.7% from the intermediate-term bottom of 51.7 in November 2009. Therefore, the current September 2010 Global All-Industry Output Index is now below mid-range from the recent top and bottom, closer to the bottom. The All-Industry Output Index is a percentage - not a total. More about the Index below the chart.

Trend The September Global All-Industry Output Index of 52.6 continues below the 12-month moving average of 54.5. Since the peak in April 2010, each month has been lower now for 5 consecutive months (May through September). However, any value over 50 indicates expansion so the growth continues at a slower pace. The recent trend is clearly downwards.

Chart (Global All-Industry Output Index) Below is a chart of the latest 14 months of the Global All-Industry Output Index from August 2009 through the latest month reported, September 2010. The Index has been greater than 50, indicating global output is expanding, since August 2009 - 14 consecutive months. The Index peaked in April 2010 at 57.7. Five consecutive monthly declines have ensued through this latest September 2010 decline. However, the 5 consecutive monthly declines still indicate global output is expanding, just at a slower rate.


After reviewing the September declines in the Global Manufacturing PMI and Global Services PMI in previous posts, this decline in the Global All-Industry Output Index comes as no surprise. A post-recession  peak was reached in April 2010 and now 5 consecutive monthly decreases have occurred. As noted in previous posts and commentary, the global economic indicators are indicating a slowing of the economic recovery.

About The Global Manufacturing & Services PMI (Global All-Industry Output Index)

The Global Report on Manufacturing & Services is compiled by Markit based on the results of surveys covering over 11,000 purchasing executives in almost 30 countries. Together these countries account for an estimated 84% of global GDP. 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. 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
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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*Data courtesy of the Institute for Supply Management and JPMorgan*

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