Boom Doom Economy: Global Economic Expansion at Post-Recession Low (Chart) *Services growth offsets manufacturing contraction*

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Global All-Industry Output Index by JPMorgan

Statement by JPMorgan August saw growth of the global economy ease to its weakest pace since the recovery began in August 2009. The JPMorgan Global All-Industry Output Index fell to 51.5 in August, from 52.5 in July, to remain well below its long-run trend level. Moreover, the average reading of the headline index so far in Q3 2011 (52.0) is lower than in Q2 (52.3) and substantially weaker than the opening quarter of the year (57.3).

Commenting on the Survey David Hensley, Director of Global Economics Coordination at JPMorgan, said: "Growth of global output eased to its weakest in the recovery-todate. Although manufacturing was the main drag, the service sector fared only moderately better. Although employment is still rising, the pace has slowed as companies have turned more cautious. Although input price inflation picked up slightly in August, the underlying trend is still for cost increases to slow over the mid-term horizon."

Trend Global PMI Output has decreased 4 of the past 6 months. The short-term trend (3-month moving average) has reversed to downwards and both the intermediate-term trend (6-month moving average) and long-term trend (12-month moving average) 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 51.7% was set in both August 2011 and 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 March 2010 through the latest month reported. The Index has been greater than 50, indicating global output is expanding, since August 2009, for 24 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 August 2011 for the 25th consecutive month, but the growth rate decreased to a recovery low. However, the Index has decreased 4 of the past 6 months. For July 2011, the various indexes reported (and are reviewed on this blog and Baidu Planet):

● USA Manufacturing PMI, expanding at a slower rate

● USA Non-Manufacturing (Services) Index, expanding at a faster rate
● China Manufacturing PMI, contracting at a slower rate

● Global Manufacturing PMI, expanding at a slower rate

● Global Non-Manufacturing (Services) Index, expanding at a slower rate

● Global All-Industry Output (Manufacturing + Services), expanding at a slower rate

The overall view is continued expansion, but slowing to near stalling.

National Data
● Manufacturing was the weaker link during the latest survey period, as production fell for the first time in 27 months. The performance of the service sector was also subdued, with the rate of expansion in business activity slipping to a four-month low.

● Rates of expansion eased in the US ( two-month low) , the Eurozone (weakest in two years), the UK (slowest since the recovery began in May 2009), India (27-month low) and Russia (11-month low). Growth in China was unchanged from July, Japan contracted at the fastest pace since May and activity in Brazil declined for the first time in over two years.

Segment Data

● New Orders Underlying the weaker expansion in global output was a further easing in the rate of increase in new orders during August. All industry new business rose at the slowest pace during the current 25-month period of expansion.

● Employment August saw employment rise for the seventeenth consecutive month, with modest jobs growth seen at both manufacturers and service providers.
● Input Prices Input price inflation accelerated for the first time in six months in August, as cost pressures remained elevated in the global economy.

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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