Thursday, October 6, 2011

Global Economic Expansion Accelerates (Chart) *Rebounds from post-recession low*


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Global All-Industry Output Index by JPMorgan


Statement by JPMorgan The JPMorgan Global All-Industry Output Index rose to 52.0 in September, up slightly from August's 25-month low of 51.5. Growth ticked higher at global service providers, while the trend in world manufacturing production moved from August's marginal contraction to stagnation. Over Q3 2011 as whole, the rate of all-industry expansion was the least marked since Q3 2009 and well below the near five year high registered in the opening quarter..

Commenting on the Survey David Hensley, Director of Global Economics Coordination at JPMorgan, said: "PMI data signal that global output and new orders both expanded at slightly faster rates in September. The implied pace of increase is still very slow, however, as growth at manufacturers has ground to a halt and conditions in the service sector remain weaker than expected. Increasing signs that the slowdown is impacting on the labor market are disappointing, and may provide an unwelcome constraint on future growth prospects."

Trend The Global PMI Output has decreased 4 of the past 7 months. The short-term trend, intermediate-term trend, and long-term trend continue downwards.

Cycle History The JPMorgan Global All-Industry Output Index reached a Post-Great Recession peak of 59.1% in February 2011. An intermediate term cyclical low of 51.5% was set in both August 2011. which was lower than the November 2009 reading of 51.7%.. 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 March 2010 through the latest month reported. The Index has been greater than 50, indicating global output is expanding, since August 2009, for 26 consecutive months. The Index reached a first peak in April 2010 at 57.7%, which was a 34-month high. A Post-Great Recession peak was subsequently reached in February 2011 at 59.1%.


Commentary Global economic expansion continued in September 2011 for the 26th consecutive month and the growth rate rebounded from the August 2011 recovery low. However, the Index has decreased 4 of the past 7 months. For September 2011, the various indexes reported (and are reviewed on this blog and Baidu Planet):
● USA Manufacturing PMI, expanding at a faster rate
● USA Non-Manufacturing (Services) Index, expanding at a slower rate
● China Manufacturing PMI, contracting at  same rate
● Global Manufacturing PMI, contracting from expanding
● Global Non-Manufacturing (Services) Index, expanding at a faster rate
● Global All-Industry Output (Manufacturing + Services), expanding at a faster rate

National Data
● The acceleration in September was mainly driven by the US, where growth of all-industry output hit a six-month high.
China also reported a slight pick-up in its pace of expansion, as did the UK.
● Growth slowed sharply in France and India, and eased in Germany, Russia and Ireland.
● Faster contractions in all-industry activity were signal led by Italy, Spain and Brazil.
● Although Japanese output also fell, the rate of contraction was weaker than during the previous month.

Segment Data
● New Orders The growth trend in global new business also improved during September. However, the rate of expansion remained much slower than those seen around the turn of the year. The acceleration in the latest survey period was also entirely centred on the service sector.
● Employment Global employment fell fractionally for the first time in one-and-a-half years in September, as slightly faster job creation at manufacturers was offset by reduced payroll numbers in the service sector
● Input Prices Cost inflationary pressure eased in September. The rate of increase in average input prices has remained weaker than the survey average throughout Q3 2011.

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
Canada 2.1
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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