Global PMI Roundup (July 2011): Manufacturing tanks

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 Country July-  11 June-11 U.S.***** 50.9 55.3 Growing Slowed significantly Eurozone* 50.4 52.0 Growing Slowed significantly Germany* 52.0 54.6 Growing Slowed significantly France* 50.5 52.5 Growing Slowed significantly Greece* 45.2 45.5 Contracting Deeper Italy* 50.1 49.9 Growing From contracting Spain* 45.6 47.3 Contracting Deeper Ireland* 48.2 49.8 Contracting Deeper U.K.* 49.1 51.3 Contracting From growing Japan* 52.1 50.7 Growing Faster Australia* 43.4 52.9 Contracting From growing Emerging Economies         Brazil* 47.8 49.0 Contracting Deeper China** 50.7 50.9 Growing, weak Slower China S/A 52.9 52.0 Growing Faster Czech* 53.4 55.1 Growing Slower Poland* 52.9 51.2 Growing Faster Turkey* 52.3 52.3 Growing Unchanged India* 53.6 55.3 Growing Slower Russia* 49.8 50.6 Contracting From growing Taiwan* 46.1 49.9 Contracting Deeper R.S.A.*** 44.2 53.9 Contracting From growing S Korea 51.3 51.1 Growing Faster Global**** 50.9 52.8 Growing SlowerSources: 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 Country July-11 Jun-11 U.S.** 52.7 53.3 Growing Slower U.S. BAI*** 56.1 53.4 Growing Faster Eurozone 51.6 53.7 Growing Slower Germany 52.9 56.7 Growing Slowed rapidly France 54.2 56.1 Growing Slower Italy 48.6 47.4 Contracting Moderating Spain 46.5 50.2 Contracting From expanding Ireland 51.7 52.4 Growing Slower U.K. 55.4 53.9 Growing Faster Japan 45.3 45.4 Contracting Deepening Australia 48.8 48.5 Contracting Moderating Emerging Economies         Brazil 53.7 52.1 Growing Faster China* 59.6 57.0 Growing, robust Faster China S/A* 58.5 57.7 Growing, robust Faster India 58.2 56.1 Growing, robust Faster Russia 56.9 55.1 Growing, robust Faster JP Morgan Global Services   53.1   52.1   Growing   FasterSources: 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 PMI Direction    Rate of change Country July-11 June-11 U.S.*** 52.3 53.8 Growing Slower Eurozone**** 51.3 53.2 Growing Slower Germany* 52.5 56.3 Growing Slower from robust France* 53.2 54.9 Growing Slower U.K.**** 53.6 53.2 Growing Slower Japan* 47.7 47.6 Contracting Improving Emerging Economies         China** 56.0 54.6 Growing Faster China S/A** 55.2 54.3 Growing Faster Brazil* 51.4 51.1 Growing Faster India* 57.9 56.8 Growing, robust Faster Russia* 54.6 53.8 Growing Faster Hong Kong* 51.4 50.3 Growing Faster UAE* 53.3 55.2 Growing Slower from robust Saudi Arabia* 60.0 62.8 Growing, robust Slower JP Morgan Global Composite* 52.6 52.2 Growing Slower  Sources: *Markit; **CFLP, Li & Fung, Plexus Asset Management; ***ISM, Plexus Asset Management; ****Markit, Plexus Asset Management.

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