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

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 PMI Direction    Rate of change Country Oct-11 Sep-11 U.S.*** 52.4 52.7 Growing Slower Eurozone**** 46.6 48.7 Contracting Faster Germany* 50.3 50.5 Growing/stagnating Slower France* 45.6 50.2 Contracting From growing U.K.**** 50.2 52.4 Growing/stagnating Slower Japan* 52.4 47.4 Growing From contracting Emerging Economies         China** 53.3 54.4 Growing Slower China S/A** 52.2 52.9 Growing Slower Brazil* 51.3 48.5 Growing From contracting India* 50.3 50.2 Growing/stagnating Faster Russia* 52.5 52.3 Growing Faster Hong Kong* 49.0 45.9 Contracting Slower UAE* 53.4 52.3 Growing Faster Saudi Arabia* 56.7 56.3 Growing Faster 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 Country Oct-11 Sep-11 U.S.** 52.9 53.0 Growing Slightly slower U.S. BAI*** 53.8 57.1 Growing Slower Eurozone 46.4 48.8 Contracting Faster Germany 50.6 49.7 Growing From contracting France 44.6 51.5 Contracting From growing Italy 43.9 45.8 Contracting Faster Spain 41.8 44.8 Contracting Faster Ireland 51.5 51.3 Growing Slightly faster U.K. 51.3 52.9 Growing Slower Japan 52.3 46.4 Growing From contracting Australia 48.8 50.3 Contracting From growing Emerging Economies         Brazil 53.6 50.5 Growing Faster China* 57.7 59.3 Growing, robust Slower China S/A* 54.6 57.0 Growing Slower India 49.1 49.8 Contracting Faster Russia 53.5 53.3 Growing Slightly faster JP Morgan Global Services   51.8   52.6   Growing   SlowerSources: Markit; CFLP*; ISM**; US Business Activity Index***; Plexus Asset Management.

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