Wednesday, April 6, 2011

Global Economic Expansion Slows Sharply in March (Chart) "Substantially influenced by Japan"

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Global All-Industry Output Index by JPMorgan


Official Statement by JPMorgan The JPMorgan Global All-Industry Output Index fell sharply to a six-month low of 54.7 in March, following slower growth of both manufacturing output and service sector activity. National data showed that the slowdown mainly reflected a weaker expansion in the US and a marked contraction in Japan. However, over Q1 2011 as a whole, growth was the strongest since Q2 2006.
● Please note that March data for China services and Hong Kong were not available for inclusion in the global PMI at the time of publication.
● The US saw its rate of expansion remain robust overall – and was still among the best performing nations in both manufacturing and services – but growth eased sharply from the stellar seven-year peak reached in February.
● The devastating impact of the Tohoku earthquake led to a marked decline in economic activity in Japan during March. If the Japanese output index had stayed at its February level, the Global Output Index reading would have been 57.3 in March.
● Although growth eased slightly in the Eurozone during March, it remained close to February's four-and-a-half year peak. The big two of Germany and France continued to lead the rebound. Growth was also recorded in Italy and Ireland, but business activity stagnated in Spain.
● Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: ""Although the global PMI survey fell sharply in March, the results were substantially influenced by Japan, where the natural disasters slammed activity. The PMI new orders index held up comparatively well as did the employment index. This suggests that the global economy's underlying trend remains solid and that the expansion will be sustained in the coming months."
 
Trend The overall increase of global economic expansion has now stopped and pulled back, after 3 consecutive monthly increases. The current Global All-Industry Output Index is now below the descending 12-month moving average of 55.8, after being above for 3 consecutive months. (The 12-month moving average chart is not shown on this page).
 
Cycle History The JPMorgan Global All-Industry Output Index reached a Post-Great Recession peak of 59.2 in February 2011. An intermediate term cyclical low of 51.7 was set in November 2009. The All-Industry Output Index is a percentage - not a total. More about the Index below the chart.
 
Chart (Global All-Industry Output Index) Below is a chart of the of the JPMorgan Global All-Industry Output Index from August 2009 through the latest month reported. The Index has been greater than 50, indicating global output is expanding, since August 2009, for 20 consecutive months. The Index peaked in April 2010 at 57.7, which was a 34-month high. A Post-Great Recession peak was reached in February 2011.


Commentary Global economic expansion continued in March, but at the slowest rate since October 2010. This same trend, a Post-Great Recession peak in February 2011 then a slowing down of expansion in March 2011, has been evident with all the PMIs and NMIs reviewed in recent posts:
● USA Manufacturing PMI
● USA Non-Manufacturing Index
● Global Manufacturing PMI
● Global Non-Manufacturing Index
In addition to the impact of the earthquake in Japan on Global economic expansion, the continuation of high oil prices is of concern as a drag on further economic growth worldwide.

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
Hong Kong 0.6
Austria 0.5
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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