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Global Manufacturing PMI Accelerates in October, Up +1.2%
Global Manufacturing PMI Up 1.2%, First Acceleration in 6 Months
Official Statement JP Morgan reported on November 2, 2010, "The rates of expansion in global manufacturing output and new orders accelerated for the first time in six months in October. At 53.7, up from September's 14-month low, the JPMorgan Global Manufacturing PMI™ posted a reading consistent with a solid improvement in overall operating conditions. However, the headline PMI and the indices for output and new orders remained below their respective post-recession averages." Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The start of Q4 2010 saw the global manufacturing sector break its recent decelerating trend. The global PMI survey indicates that growth of output and new orders improved for the first time since April, while there were further signs of ongoing solid job creation. Although the rates of expansion were below those seen earlier in the recovery, it suggests that the inventory-correction and the consequent drag on manufacturing output are beginning to lose intensity."
Cycle History The current JPM Manufacturing PMI is up +20.0 and +59% from the Great Recession cyclical bottom of 33.7 in December 2008. The PMI is down -4.1 and -7% from the recent cyclical peak of 57.8 in April 2010. Therefore, the current PMI is closer to the cyclical peak than the trough. The PMI is a percentage - not a total. More about the PMI below the chart.
Trend The current PMI continues below the April 2010 peak and had decreased the 5 subsequent months before this current October increase. The current PMI is below the 12-month moving average of 55.1 but still above the 24-month moving average of 49.3. The 12-month moving average has leveled off and the 24-month moving average continues ascending. The recent trend has been downwards. .(The 12-month and 24-month moving averages charts are not shown on this page).
JPM Monthly Global Manufacturing PMI (Chart) Below is a chart of the latest 28 months of the Purchasing Managers' Index (PMI) from July 2008 through the latest month reported, October 2010. The PMI has been greater than 50, indicating global manufacturing is expanding, since August 2009, for 15 consecutive months. As can be seen, the PMI bottomed in December 2008 at 33.7, ascended significantly through August 2009 to 53.1. The PMI eventually continued upwards to a peak of 57.8 in April 2010. 5 consecutive monthly declines ensued until this current October increase. However, the PMI still indicates global manufacturing has been expanding, just a a slowing rate through September.
JPM Monthly Global Manufacturing PMI (Chart) Below is a chart of the latest 28 months of the Purchasing Managers' Index (PMI) from July 2008 through the latest month reported, October 2010. The PMI has been greater than 50, indicating global manufacturing is expanding, since August 2009, for 15 consecutive months. As can be seen, the PMI bottomed in December 2008 at 33.7, ascended significantly through August 2009 to 53.1. The PMI eventually continued upwards to a peak of 57.8 in April 2010. 5 consecutive monthly declines ensued until this current October increase. However, the PMI still indicates global manufacturing has been expanding, just a a slowing rate through September.
Commentary The October Global Manufacturing PMI of 53.7 and a +1.2% decrease from September is encouraging after 5 consecutive monthly declines. The USA Manufacturing PMI also increased in October and is reviewed here (USA Manufacturing PMI Increases in October, at 5-Month High (Chart) *Signals continuation of economic recovery*). In September not only had a USA economic slowdown persisted, but the slowdown was on a global level . Hopefully the October data for both the USA and global economies will signal a trend reversal. Most striking was the comment by David Hensley, Director of Global Economics Coordination at JPMorgan, "The start of Q4 2010 saw the global manufacturing sector break its recent decelerating trend."
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 29 countries. Together these countries account for an estimated 90% 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. 50.0 = no change level.
Data sources: Country % share of global GDP
United States 28.8
Japan 12.8
China 6.5
Germany 5.2
United Kingdom 4.3
France 3.8
Italy 2.9
Brazil 2.1
India 2.0
South Korea 1.9
Spain 1.8
Australia 1.3
Netherlands 1.1
Russia 1.1
Turkey 1.0
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
Ireland 0.3
Singapore 0.3
Czech Republic 0.2
New Zealand 0.2
Hungary 0.2
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S&P 500 (SPX) charts and review
Other Links
Institute for Supply Management ISM
JPMorgan Global Manufacturing PMI Press Release (JPMorgan) (pdf download)
*Data courtesy of the Institute for Supply Management and JPMorgan*
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