Global PMI Scorecard (Sept 2011): Growth accelerating despite Eurozone sinking
Global economic activity accelerated in September despite the contraction in economic activity in the Eurozone. However, the global services sector saved the day as global manufacturing stagnated.
The increase in the JP Morgan Global Composite Index to 52.0 in September from 51.5 in August is attributed mainly to a jump to a solid increase in the U.K.’s PMI to 51.5 from 50.4 in August, while Markit’s composite PMI for China increased to 51.5 from 50.4. Although the composite PMI I calculate from CFLP’s manufacturing and non-manufacturing PMIs also increased from 54.9 in August to 56.1 in September, the seasonally adjusted PMI in my calculations actually fell to 52.9 from 53.8 in August. The easing of the contraction in Japan also contributed to the improvement in the JP Morgan Global Composite Index.
My GDP-weighted Composite ISM PMI for the U.S. in September came in unchanged from August’s 52.7, indicating continued but below-par growth. France and Germany’s composite PMIs indicate that growth in the two major economies in the Eurozone has stalled. Economic activity in the Eurozone as a whole has moved from growing to contracting, though, and indicates a significant contraction in the rest of the economic zone.
Economic activities in emerging economies are mixed. The contraction in Hong Kong and Brazil is quickening, while India’s expansion has slowed significantly. Russia is holding up reasonably well.
Sources: *Markit; **CFLP, Li & Fung, Plexus; ***ISM, Plexus Asset Management; ****Markit, Plexus Asset Management.
The JP Morgan Global Services PMI for September rose to 52.6 from 52.0 with China leading the way, followed by the U.K. and the easing of the contraction in Japan’s services sector. Although the U.S.’s ISM non-manufacturing PMI was a tad lower at 53.0 from 53.3 in August, the business activity index rose markedly to 57.1 from 55.6.
The services sector in the Eurozone tanked, with the PMI sinking to 48.8 from 51.5 where a level below 50 indicates contraction. The fall-off in activity in the services sector in the economic zone was broad based and led by Germany, which moved from expansion to contraction. The contraction in Italy and Spain’s services sectors deepened, but Ireland managed to stay afloat and eke out some acceleration in growth. Worst hit was France, where the PMI fell 5.3 points to a still expanding 51.5.
Growth in Australia’s services sector lost momentum as the PMI fell to a virtually stagnant 50.3. Russia was a star among the BRICS countries as its services PMI edged up slightly to 53.3. India’s services PMI fell heavily from a solid expanding 53.8 to contraction, while Brazil’s PMI also fell to near stagnation levels.
Sources: Markit; CFLP*; ISM**; US Business Activity Index***; Plexus Asset Management.
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