Global PMI Scorecard (Oct 2011): Growth falters, with exception of Japan

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Growth in global economic activity faltered in October after accelerating in September. The global manufacturing sector slipped into recession territory while growth in the services sector slowed markedly.

The JP Morgan Global Composite Index fell to 51.4 after rising to 52.0 in September from 51.5 in August. The drop in the composite PMI is mainly attributed to a significant drop in my calculated GDP-weighted PMI for the Eurozone to 46.6 from 48.7 in September. Germany’s composite PMI at a 27-month low indicates that economic activity in the private sector has virtually stagnated while economic activity in France, Italy and Spain at 28 to 30-month lows has contracted severely. Growth in the U.K. weakened considerably to stagnation levels.

My GDP-weighted Composite ISM PMI for the U.S. in October eased to 52.4 from 52.7 in September, indicating continued but below-par growth.

Growth in China also eased on a non-seasonally as well as a seasonally adjusted basis.

Japan was the exception to the rule among developed economies. According to Markit, Japanese private sector activity rose for the first time since February as the composite output index breached the neutral 50.0 threshold. The composite PMI jumped from a contracting 47.0 to a highest reading of 52.4 since data were first compiled in September 2007.

Economic activity in emerging economies improved somewhat. Brazil has returned to growth again. Growth in India and Russia edged up marginally while the contraction in Hong Kong eased markedly.

GDP-weighted/ Composite PMIDirection 

 

Rate of change

CountryOct-11Sep-11
U.S.***52.452.7GrowingSlower
Eurozone****46.648.7ContractingFaster
Germany*50.350.5Growing/stagnatingSlower
France*45.650.2ContractingFrom growing
U.K.****50.252.4Growing/stagnatingSlower
Japan*52.447.4GrowingFrom contracting
Emerging Economies
China**53.354.4GrowingSlower
China S/A**52.252.9GrowingSlower
Brazil*51.348.5GrowingFrom contracting
India*50.350.2Growing/stagnatingFaster
Russia*52.552.3GrowingFaster
Hong Kong*49.045.9ContractingSlower
UAE*53.452.3GrowingFaster
Saudi Arabia*56.756.3GrowingFaster
JP Morgan Global Composite*  

51.4

 

52.0

 

Growing

 

Slower

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

The JP Morgan Global Services PMI for October eased to 51.8 from 52.6 in September on the back of a significant deepening in the contraction in the Eurozone and especially France, Italy and Spain. The Germans are holding out, though, and have managed to eke out some growth from contracting in September. The services sector in the U.K. continues to exhibit some growth but at a reduced rate, while growth in Ireland accelerated slightly. Australia’s services sector is under the water again while growth in the services sector in China is weakening. The U.S.’s ISM non-manufacturing PMI continued its slightly weaker trend with the PMI marginally lower at 52.9 from 53.0 in September. However, it surprised the market on the downside as the consensus was for a rise to 53.5. The Business Activity Index fell sharply from a robust 57.1 to 53.8.

Among the BRICS countries Brazil made a huge turnaround as its services PMI jumped to 53.6 from 50.5 in September. Russia experienced a slight acceleration in growth but the contraction in India’s services sector has deepened.

 

Non-manufacturing/

Services PMI

 

Direction

 

Rate of Change

CountryOct-11Sep-11
U.S.**52.953.0GrowingSlightly slower
U.S. BAI***53.857.1GrowingSlower
Eurozone46.448.8ContractingFaster
Germany50.649.7GrowingFrom contracting
France44.651.5ContractingFrom growing
Italy43.945.8ContractingFaster
Spain41.844.8ContractingFaster
Ireland51.551.3GrowingSlightly faster
U.K.51.352.9GrowingSlower
Japan 52.346.4GrowingFrom contracting
Australia 48.850.3ContractingFrom growing
Emerging Economies
Brazil53.650.5GrowingFaster
China*57.759.3Growing, robustSlower
China S/A*54.657.0GrowingSlower
India49.149.8ContractingFaster
Russia53.553.3GrowingSlightly faster
JP Morgan Global Services  

51.8

 

52.6

 

Growing

 

Slower

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

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