Tuesday, September 6, 2011

Global Manufacturing Growth Slows to Near Standstill (Chart) *25-Month Low: very close to stalling*


Global Manufacturing PMI by JPMorgan

Statement by JPMorgan The global manufacturing slowdown continued in August. At 50.1, the JPMorgan Global Manufacturing PMI is only marginally above the neutral 50.0 mark and has fallen to its lowest level since June 2009.

Commenting on the PMI Joseph Lupton, Global Economist at JPMorgan, said: ""PMI data indicate that the global manufacturing sector has made a weak start to the second half of the year. August saw output dip slightly for the first time since May 2009, as new order inflows and international trade volumes weakened. Brighter news was seen on the price front, with cost inflationary pressure slowing further from February's high"

Trend The Global Manufacturing PMI has decreased 6 consecutive months. The short term trend (3-month moving average), the intermediate-term trend (6-month moving average), and the long-term trend (12-month moving average) continue 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 25 consecutive months.

Commentary The August 2011 Global Manufacturing PMI of 50.1 is a 25-month low (July 2009 = 50.0) and the 6th consecutive monthly decline in the rate of expansion.  Any further decline in the PMI will indicate no growth (= 50.0) or a contraction (< 50.0). It was noted, "output dipped slightly for the first time since May 2009, as new order inflows and international trade volumes weakened". There is no sign of a rebound, or a reason for a rebound, on the horizon. Ongoing lower oil prices and an increase in business and consumer confidence is necessary to spur growth. Highlights include:
● Manufacturing Production contracted slightly - ending a 26-month period of expansion - following a further decrease in the volume of new orders.
● New Orders declined for the second month in a row in August. Lower levels of new business were signalled in the US, the EurozoneChina, the UK and Brazil. Within the euro area, all of the nations covered saw a decline in new work received. In contrast, the recovery in Japanese new orders gathered pace.
● International Trade flows declined for the first time in over two years during August.
● Employment increased for the twenty-first successive month in August. However, the rate of jobs growth eased further from February's survey record high to the weakest since January 2010.
● Input Prices rose for the twenty-fifth consecutive month, but the rate of increase was the weakest since July 2010.

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 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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