Global PMI Roundup (July 2011): Manufacturing tanks

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Growth in the global manufacturing industry tanked in July. My GDP-weighted manufacturing PMI for the major economies sank for the fifth consecutive month to 50.9 from 52.8 in June. The manufacturing sectors in only four out of 20 countries are showing faster growth, while nine countries are now contracting and growth in four has slowed significantly.

The current situation looks extremely grim when compared to February this year. Japan, China, Poland and South Korea maintained reasonable growth, though.

From riches to rags …

The significant jump in the U.S.’s ISM manufacturing PMI in June was erased as the PMI fell to a barely growing 50.9 in July. The Eurozone’s PMI fell further to a barely growing 50.4 after falling to 52.0 in June from 54.6 in May. Growth in the PMI of the two stalwarts, Germany and France, continued to slow significantly. Germany’s PMI fell by 3.1 points in June, followed by another of 2.6 points, while France’s PMI fell to 50.5 from 52.5. The manufacturing sectors of all the Eurozone’s problem countries except Italy continue to deepen. Growth in emerging European countries held up reasonably well, but other emerging economies are reeling. Australia and South Africa were the biggest casualties. Australia’s PMI slumped to 43.4 from 52.9, while South Africa’s PMI slumped to 44.2 from 53.9. The contraction in Brazil and Taiwan deepened, while Russia’s manufacturing sector is contracting again. The bright spot in the global manufacturing sector is Japan, where the PMI jumped to 52.1 from 50.7 in June. China’s CFLP manufacturing PMI retreated marginally from 50.9 to 50.7 in July. On a seasonally adjusted basis the PMI in fact rose to 52.9 from 52.0 in June.

 

Manufacturing PMI

 

Direction

 

Rate of Change

CountryJuly- 

11

June-11
U.S.*****50.955.3GrowingSlowed significantly
Eurozone*50.452.0GrowingSlowed significantly
Germany*52.054.6GrowingSlowed significantly
France*50.552.5GrowingSlowed significantly
Greece*45.245.5ContractingDeeper
Italy*50.149.9GrowingFrom contracting
Spain*45.647.3ContractingDeeper
Ireland*48.249.8ContractingDeeper
U.K.*49.151.3ContractingFrom growing
Japan*52.150.7GrowingFaster
Australia*43.452.9ContractingFrom growing
Emerging Economies
Brazil*47.849.0ContractingDeeper
China**50.750.9Growing, weakSlower
China S/A52.952.0GrowingFaster
Czech*53.455.1GrowingSlower
Poland*52.951.2GrowingFaster
Turkey*52.352.3GrowingUnchanged
India*53.655.3GrowingSlower
Russia*49.850.6ContractingFrom growing
Taiwan*46.149.9ContractingDeeper
R.S.A.***44.253.9ContractingFrom growing
S Korea51.351.1GrowingFaster
Global****50.952.8GrowingSlower

Sources: Markit*; Li & Fung**; Kagiso***; Plexus Asset Management****; ISM*****.

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****.

Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****.

Non-manufacturing/Services PMIs

The JP Morgan Global Services PMI for July improved to 53.1 from 52.2 in June. I think it is rather flattering, though. Most of the increase was as a result of the ISM non-manufacturing Business Activity Index (BAI) that jumped from 53.4 in June to 56.1 in July. The ISM Non-Manufacturing Index (NMI) on the other hand fell to 52.7 from 53.3 in June. As the non-manufacturing PMIs of other economies are calculated on the same basis as the ISM BAI, it makes sense to compare like with like.

The Eurozone services PMI is increasingly losing ground as the index shed another 2.1 index points on top of the 1.7 and 1.3 index points lost in June and May respectively to finish at a still expanding but weak 51.6 in July. Germany’s PMI fell from a robust 56.7 to 52.9, while France fared somewhat better with 54.2 from 56.1 in June. The contraction in Italy moderated somewhat, but Spain’s services industry has moved from expansion to contraction. Ireland’s growth is moderating, but the services sector in the U.K. is expanding at a faster rate. There is still no let-up in the contraction in Japan’s services sector, but some moderation in the contraction in Australia is evident. The pace of expansion in emerging economies is quickening, though. China’s CFLP non-manufacturing PMI jumped by 2.6 basis points to a robust 59.6 and by 0.8 basis points to 58.5 on a seasonally adjusted basis. Growth in the services sectors in India and Russia is also accelerating.

Sources: ISM, Markit, CFLP, Plexus Asset Management.

Non-manufacturing/ Services PMI  

Direction

 

Rate of Change

CountryJuly-11Jun-11
U.S.**52.753.3GrowingSlower
U.S. BAI***56.153.4GrowingFaster
Eurozone51.653.7GrowingSlower
Germany52.956.7GrowingSlowed rapidly
France54.256.1GrowingSlower
Italy48.647.4ContractingModerating
Spain46.550.2ContractingFrom expanding
Ireland51.752.4GrowingSlower
U.K.55.453.9GrowingFaster
Japan 45.345.4ContractingDeepening
Australia 48.8 48.5ContractingModerating
Emerging Economies
Brazil53.752.1GrowingFaster
China*59.657.0Growing, robustFaster
China S/A*58.557.7Growing, robustFaster
India58.256.1Growing, robustFaster
Russia56.955.1Growing, robustFaster
JP Morgan Global Services  

53.1

 

52.1

 

Growing

 

Faster

Sources: Markit; CFLP*; ISM**; US Business Activity Index***; Plexus.

The June JP Morgan Global Composite PMI, where the manufacturing and non-manufacturing/services are both taken into account, increased to 52.6 from 52.3 in June (a number above 50 indicates expansion), but this can largely be attributed to the jump in the ISM non-manufacturing BAI, as I mentioned before .

A slowdown in growth continues to be particularly evident in countries in the Eurozone, with the region’s Markit composite PMI falling by another 1.9 points on top of the 2.0 points lost in June to a weak but still expanding 51.3.  Germany’s previous robust Markit composite PMI showed a fall of 3.8 basis points to 52.5, while France’s composite PMI fell to 53.2 from 54.9 in June.

The contraction in Japan eased slightly, with the Markit composite PMI rising to 47.7 from 47.6 from in June.  Growth in the U.S. decelerated, with my ISM GDP-weighted composite PMI dropping to 52.3 from 53.8 in June. Although the 1.4 basis point increase in my composite PMI for China to 56.0 from 54.6 in June was largely due to seasonal factors, my seasonally adjusted index rose by 0.9 points to 55.2 from 54.3. Elsewhere the composite PMIs for all emerging economies improved, except in the case of the UAE where the PMI shed 1.9 points.

Sources: ISM, Markit, CFLP, Plexus Asset Management.

GDP-weighted/ Composite PMIDirection 

 

Rate of change

CountryJuly-11June-11
U.S.***52.353.8GrowingSlower
Eurozone****51.353.2GrowingSlower
Germany*52.556.3GrowingSlower from robust
France*53.254.9GrowingSlower
U.K.****53.653.2GrowingSlower
Japan*47.747.6ContractingImproving
Emerging Economies
China**56.054.6GrowingFaster
China S/A**55.254.3GrowingFaster
Brazil*51.451.1GrowingFaster
India*57.956.8Growing, robustFaster
Russia*54.653.8GrowingFaster
Hong Kong*51.450.3GrowingFaster
UAE*53.355.2GrowingSlower from robust
Saudi Arabia*60.062.8Growing, robustSlower
JP Morgan Global Composite*52.652.2GrowingSlower 

Sources: *Markit; **CFLP, Li & Fung, Plexus Asset Management; ***ISM, Plexus  Asset Management; ****Markit, Plexus Asset Management.

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