Monday, August 1, 2011

Global Manufacturing Growth Slows to Near Standstill (Chart) 24-Month Low: "closer to stagnation"


Global Manufacturing PMI by JPMorgan

Official Statement by JPMorgan The JPMorgan Global Manufacturing PMI fell to 50.6 in July, down a significant -1.7 from 52.3 in June and well below the February 2011 recent peak of 57.4. The latest reading was the weakest since July 2009 (50.0), the first month of the global economic recovery. The PMI has decreased for 5 consecutive months. Highlights include:
● Manufacturing Production rose for the twenty-sixth consecutive month in July, although the rate of increase was the slowest since the opening month of this sequence.
● New Orders posted a negligible decline in July. New work fell in the US, the Eurozone and the UK. Rates of increase eased to a near-standstill in China and to the weakest in the ongoing 28-month period of expansion in India. Japan saw new business rise at a faster pace
● International Trade was unchanged from the previous month's two-year low. The rate of increase eased in developed markets, whereas emerging nations saw a further modest reduction in new exports.
● Employment/Job Creation rose for the twentieth consecutive month in July. However, jobs growth slipped to a one-and-a-half year low that was below the average for the current sequence of increase
● Input Prices Slower global growth and recent falls in the price of a number of commodities led to a further easing in input cost inflation. The latest increase in purchase prices was the least marked in a year

Commenting on the PMI Joseph Lupton, Global Economist at JPMorgan, said: "Growth of the global manufacturing sector drifted closer to stagnation in July. Hopes of a near-term acceleration may have also been knocked by a slight retreat into contraction territory by the new orders index. More positive is that jobs growth, although slowing, is holding up comparatively well. Weaker price inflation and subsiding supply-chain pressures will also provide some welcome respite for manufacturers."

Trend The short term trend (3-month moving average) continues downwards with 4 consecutive monthly decreases and a 23-month low in June. The intermediate-term trend (6-month moving average) continues downwards. The long-term trend (12-month moving average) continues downwards.

Cycle History The JPMorgan Manufacturing PMI reached a Post-Great Recession peak of 57.7 in April 2010. A Great Recession cyclical bottom of 33.7 was set in December 2008. The PMI is a percentage - not a total. More about the PMI below the chart.

JPMorgan Monthly Global Manufacturing PMI (Chart) Below is a chart of the Purchasing Managers' Index (PMI) from the cyclical high, the Post-Great Recession high of 57.7 in April 2010 through the latest month reported. The PMI has been greater than 50, indicating global manufacturing is expanding, since August 2009. The PMI still indicates global manufacturing has been expanding since August 2009, for 24 consecutive months.

Commentary The July 2011 Global Manufacturing PMI of 50.6 is a 24-month low (July 2009 = 50.0) and the 5th consecutive monthly decline in expansion.  It was noted, "Growth of production slowed to a near standstill, as levels of incoming new business declined slightly for the first time in over two years." There is no sign of a rebound, or a reason for a rebound, on the horizon. A decrease in oil prices and increase in consumer confidence is necessary. 

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 almost 30 countries. Together these countries account for an estimated 86% 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.

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

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

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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