Tuesday, February 8, 2011

Global Economic Output at 57-Month High! (Chart) *January marks 18th month of expansion*

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Global All-Industry Output Index by JPMorgan


Global All-Industry Output Index at 57-Month High!

Official Statement by JPMorgan At 58.3 in January, up from 57.0 in December, the JPMorgan Global All-Industry Output Index* rose to its highest level since April 2006. Rates of expansion also accelerated in both the manufacturing and service sectors. Measured overall, all-industry output has now risen throughout the past one-and-a-half years.
* Growth strengthened in the US during January, with output rising at the fastest pace since April 2004. Conditions also picked up in the euro area, with the rate of expansion hitting a nine-month high.
* The recovery within the Eurozone remained two-speed, however, as output in Germany rose at the second-fastest rate in the survey history and growth accelerated to a four-month high in France. Although there were some signs of improvement at the periphery - all-industry growth picked up in Ireland and Italy, while Spain stagnated after four months of contraction - this was mainly confined to the manufacturing sector.
UK output rose at the fastest pace since last March, as growth of manufacturing production improved to its second-highest in the 19-year (UK manufacturing) survey history and the service sector rebounded from the weather-related contraction in December. There was also a positive development in Japan. Japanese all-industry output rose for the first time in eight months, although the rate of increase was only slight. Activity rose at faster rates in India and Brazil.
 
Cycle History The current Global All-Industry Output Index of 58.3 is at not only a post-Great Recession peak but also a pre-Great Recession peak and 57 month high. The current Index  is up +6.6 and +13% from the intermediate-term bottom of 51.7 in November 2009. The All-Industry Output Index is a percentage - not a total. More about the Index below the chart.

Trend The overall trend has been upwards and is now at a pre-Great Recession peak. The Global All-Industry Output Index of 58.3 regained the ascending 12-month moving average of 55.5 in December. Since the peak in April 2010 (57.7), there have been 6 decreases in the last 9 months. The increases have been large and enough to put the Index over the top and at a 57 month high. However, any value over 50 indicates expansion, so the growth had continued at a slower pace and the Index has remained above 50 for 18 consecutive months. (The 12-month moving average chart is not shown on this page).

Chart (Global All-Industry Output Index) Below is a chart of the latest 18 months of the Global All-Industry Output Index from August 2009 through the latest month reported, January 2011. The Index has been greater than 50, indicating global output is expanding, since August 2009, for 18 consecutive months. The Index peaked in April 2010 at 57.7, which was a 34-month high and now the January 2011 Index of 58.3 has exceeded this previous peak. Five consecutive monthly declines ensued until the October acceleration, November dip, and now December and January increases.



Commentary The January 2011 increase of the Global All-Industry Output Index (+1.3%) to a strong 58.3 was enough to set a 57 month high and continue the now 18 consecutive months of expansion. Both the the Global Manufacturing PMI and Global Services PMI were reviewed in previous posts as are the USA Manufacturing PMI and Non-Manufacturing PMI.

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 83% 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 sources: Country % share of global GDP
United States 28.6
Japan 12.3
China 7.4
Germany 5.0
United Kingdom 4.2
France 3.7
Italy 2.8
Brazil 2.2
India 2.2
South Korea 1.9
Spain 1.8
Australia 1.4
Netherlands 1.1
Russia 1.0
Turkey 0.9
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
Singapore 0.4
Ireland 0.3
Czech Republic 0.2
New Zealand 0.2
Hungary 0.1

J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $803 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers nationwide, and many of the world’s most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at http://www.jpmorganchase.com/.

Markit Economics is a specialist compiler of business surveys and economic indices, including the Purchasing Managers’ Index™ (PMI™) series, which is now available for 26 countries and key regions including the Eurozone and BRIC. The PMIs have become the most closely-watched business surveys in the world, favoured by central banks, financial markets and business decision makers for their ability to provide up-to-date, accurate and often unique monthly indicators of economic trends. To learn more go to www.markit.com/economics.

Founded in 1915, the Institute for Supply Management™ (ISM) is the largest supply management organization in the world as well as one of the most respected. ISM's mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. ISM's membership base includes approximately 40,000 supply management professionals with a network of domestic and international affiliated associations. ISM is a not-for-profit institute that provides opportunities for the promotion of the profession and the expansion of professional skills and knowledge.

The International Federation of Purchasing and Supply Management (IFPSM) is the union of 42 national purchasing associations worldwide. Within this circle, about 200,000 purchasing professionals can be reached. IFPSM is a non-political, independent and non-profit oriented international organisation, registered in Aarau, Switzerland. IFPSM facilitates the development and distribution of knowledge to elevate and advance the procurement profession, thus favourably impacting the standard of living of citizens worldwide through improved business practices.


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


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