Global PMI Roundup (August 2011): weak but still growing

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The pace of growth in global economic activity continued to slow in August. The JP Morgan Global Composite PMI dropped to 51.5 in August from 52.6 in July and is moving closer to the precarious 50 mark as a drop below 50 will mean contraction in the global economy.

On a GDP-weighted/composite basis (manufacturing and non-manufacturing/services combined) the U.S. and France were the only economies where the PMIs indicated faster growth. My GDP-weighted ISM PMI for the U.S. improved to 52.7 from 52.3 in July, while Markit’s composite PMI for France rose to 53.7 from 53.2.

My GDP-weighted PMI for the Eurozone fell to 50.8 from 51.3 with Markit’s composite PMI for Germany dropping to 51.3 from 52.5. With Germany and France the two major economies in the Eurozone, the composite PMIs indicate that the rest of the economies in the region are contracting and that growth in the U.K. has slumped.

Japan’s recovery from the twin disasters is weakening. In the rest of the Far East, China’s GDP-weighted CFLP fell on both an unadjusted and seasonally-adjusted basis. Hong Kong went from growing to contraction and India’s growth slowed markedly.

Of the other emerging economies Brazil went from growing to contracting, while growth in Russia slowed. The slowdown is also apparent in the major oil-producing economies.

GDP-weighted/ Composite PMIDirection 

 

Rate of change

CountryAug-11July-11
U.S.***52.752.3GrowingFaster
Eurozone****50.851.3GrowingSlower
Germany*51.352.5GrowingSlower
France*53.753.2GrowingFaster
U.K.****50.553.6GrowingSlowed rapidly
Japan*46.747.7ContractingFaster
Emerging Economies
China**54.956.0GrowingSlower
China S/A**53.855.2GrowingSlower
Brazil*49.651.4ContractingFrom growing
India*54.557.9GrowingSlowed rapidly
Russia*52.654.6GrowingSlowed
Hong Kong*47.851.4ContractingFrom growing
UAE*50.953.3GrowingSlower
Saudi Arabia*57.960.0Growing, robustSlower
JP Morgan Global Composite*  

51.5

 

52.6

 

Growing

 

Slower

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

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

Most of the slowdown can be attributed to the global non-manufacturing sector as the JP Morgan Global Services PMI indicates a marked slowdown in August, with the PMI falling to 52.0 from 53.1 in July.

The U.S., France and Australia bucked the trend, though. In the U.S. the ISM non-manufacturing PMI surprised by rising to 53.3 from 52.7 in July, but the ISM business activity index slowed slightly from a robust 56.1 to 55.6. France’s services sector gained traction and rose to 56.8 from 54.2, while Australia’s services sector is expanding again.

Growth in the services sector in the rest of the Eurozone has stalled. Germany is barely growing with a PMI that slumped to 51.1 from 52.9 in July, while the contraction in Italy and Spain has intensified. On the British Isles growth in Ireland’s services sector is fading again, while in the U.K. the sector slumped as the PMI fell to 51.1 from a robust 55.4 in July, indicating abysmal growth.

August saw a significant slowdown in growth in Asia’s services sector as the return to pre-disaster levels in Japan faded. India’s PMI slumped from a robust 58.2 to 53.8, while China’s CFLP non-manufacturing PMI surprised on the downside with the seasonally-adjusted PMI falling to 56.0 from 58.5. The same weakening trend was evident in Brazil and Russia.

 

Non-manufacturing/

Services PMI

 

Direction

 

Rate of Change

CountryAug-11July-11
U.S.**53.352.7GrowingFaster
U.S. BAI***55.656.1GrowingSlower
Eurozone51.551.6GrowingSlower
Germany51.152.9GrowingSlowed rapidly
France56.854.2GrowingFaster
Italy48.448.6ContractingFaster
Spain45.246.5ContractingFaster
Ireland51.151.7GrowingSlower
U.K.51.155.4GrowingSlowed rapidly
Japan 44.345.3ContractingFaster
Australia 52.148.8GrowingFrom contracting
Emerging Economies
Brazil52.253.7GrowingSlower
China*57.659.6Growing, robustSlower
China S/A*56.058.5Growing, robustSlower
India53.858.2GrowingSlowed rapidly
Russia53.256.9GrowingSlowed rapidly
JP Morgan Global Services  

52.0

 

53.1

 

Growing

 

Slower

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

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

Growth in the global manufacturing sector has stalled. The global manufacturing PMI that I calculate on a GDP-weighted basis for the major economic regions fell to 50.4 from 50.9 in July, while the JP Morgan Global Manufacturing PMI fell to 50.1.

It does not paint a pretty picture. Germany is the only country in the Eurozone in which the manufacturing sector is still displaying some growth, albeit paltry. The rest of the region’s manufacturing sector is in the grip of a recession. France and Italy dipped into contraction, while the contraction in Greece, Spain, Italy and U.K. accelerated. The rate of contraction in Ireland slowed, though. Emerging Europe is also feeling the pinch as growth slowed in Poland, while Turkey dipped into contraction.

While the U.S. manufacturing sector still displayed some growth with the ISM manufacturing PMI at 50.6 in August, it is close to stalling.

The Far East has not been spared the slowdown. India’s manufacturing sector has lost steam, South Korea has moved from growing to contracting, while the contraction in Taiwan and Australia has worsened. The recovery in Japan’s manufacturing sector is losing some steam as the PMI edged lower to 51.9 from 52.1 in July. China was the exception with the CFLP manufacturing PMI improving to 50.9 from 50.7 in July, but surprised me on the downside as my seasonally-adjusted PMI fell to 52.3 from 52.9.

The contraction in Brazil’s manufacturing sector deepened, but slowed slightly in Russia. However, the contraction in South Africa’s manufacturing sector slowed significantly.

 

Manufacturing PMI

 

Direction

 

Rate of Change

CountryAug-11July-11
U.S.*****50.650.9GrowingSlower
Eurozone*49.050.4ContractingFrom growing
Germany*50.952.0GrowingSlower
France*49.150.5ContractingFrom growing
Greece*43.345.2ContractingFaster
Italy*47.150.1ContractingFrom growing
Spain*45.345.6ContractingFaster
Ireland*49.748.2ContractingSlower
U.K.*49.049.1ContractingFaster
Japan*51.9 52.1GrowingSlower
Australia*43.3 43.4ContractingFaster
Emerging Economies
Brazil*46.047.8ContractingFaster
China**50.950.7GrowingFaster
China S/A52.352.9GrowingSlower
Czech*53.453.4GrowingSteady
Poland*51.852.9GrowingSlower
Turkey*49.852.3ContractingFrom growing
India*52.653.6GrowingSlower
Russia*49.949.8ContractingSlower
Taiwan*45.246.1ContractingFaster
R.S.A.***46.744.2ContractingSlower
S Korea49.751.3ContractingFrom growing
Global****50.4 50.9Growing Slower

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*****.

 

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