Monday, December 6, 2010

Global All-Industry Output Index Down -0.2% in November (Chart) "Economic recovery continued"

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Global All-Industry Output Index by JPMorgan


Global All-Industry Output Index Down -0.2% in November

Official Statement by JPMorgan November PMI data signalled that global economic activity increased for the sixteenth successive month. The JPMorgan Global All-Industry Output Index posted 54.6, broadly in line with October's four-month high of 54.8 and above the average for the current period of expansion. However, the index remained well below April's 34-month high.
* November saw growth of service sector business activity outpace that for manufacturing output for the first time since the recovery began. Services activity rose for the sixteenth month running and at the fastest pace since June. Manufacturing production has now expanded throughout the past one-and-a half years, but the latest increase was less marked than in the previous month.
* After accelerating sharply in October, growth in the US eased markedly in November – especially in the manufacturing sector. However, the rate of expansion in all-industry output remained above the global average. Growth also eased in China, dipping slightly below the average for the current period of expansion. India meanwhile recorded a substantial increase in activity and the steepest rate of expansion for four months.
* Growth picked up to a three-month high in the Eurozone. UK output rose at a solid pace, with substantial growth of manufacturing production partly offset by the ongoing weaker performance of services. In contrast, Japan contracted for the sixth successive month, reflecting declines in both manufacturing output and services business activity.
* David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The November PMIs are pointing to growth of global GDP holding steady at an annualized rate of around 2.5%-3.0% q/q. Services outperformed manufacturing for the first time during the current upturn, a pattern we expect to be maintained in 2011. Employment showed its most meaningful gain since December 2007, a positive step towards sustaining the recovery."

Cycle History The data on the chart below is limited to the latest 16 months ending November 2010. The current Global All-Industry Output Index of 54.6 is down -3.1 and -5.4% from the post-recession peak, and 34 month high, of 57.7 in April 2010. The current Index  is up +2.9 and +5.6% from the intermediate-term bottom of 51.7 in November 2009. Therefore, the current Global All-Industry Output Index is approximately mid-range from the recent top and bottom. The All-Industry Output Index is a percentage - not a total. More about the Index below the chart.

Trend The current Global All-Industry Output Index of 54.6 dropped back below the 12-month moving average of 54.8. Since the peak in April 2010, this is the 6th decrease in the last 7 months. However, any value over 50 indicates expansion, so the growth had continued at a slower pace and the Index has remained above 50 for 16 consecutive months.

Chart (Global All-Industry Output Index) Below is a chart of the latest 16 months of the Global All-Industry Output Index from August 2009 through the latest month reported, November 2010. The Index has been greater than 50, indicating global output is expanding, since August 2009, for 16 consecutive months. The Index peaked in April 2010 at 57.7, which was a 34-month high. Five consecutive monthly declines ensued until the latest October 2010 acceleration and now the November dip.



Commentary After reviewing the November acceleration, a 4 month high, in the Global Manufacturing PMI and the November acceleration, a 5 month high, in the Global Services PMI in previous posts, this decrease in the Global All-Industry Output Index is a surprise. A post-recession  peak was reached in April 2010, then 5 consecutive monthly decreases, an October increase, and now a November decrease. However, the Index has remained above 50, which indicates economic expansion, for 16 consecutive months.

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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Other Links
Institute for Supply Management (ISM)
JPMorgan Global Manufacturing PMI Press Release (JPMorgan) (pdf download)
*Data courtesy of the Institute for Supply Management and JPMorgan*


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