Econintersect: The release of the March 2013 Global PMI by Markit and JP Morgan Chase (NYSE:JPM) provides a level of encouragement about the world economy, however meager. Readings above 50 indicate expansion and below, contraction. Improvement of output and new orders being among the strongest parameters is encouraging.
Click on table by Markit for larger image.
The following graphics put the current data in perspective: For nearly two years the reading has been bouncing both sides of the 50 demarcation line.
Global Industrial Production (IP) data lags PMI by several months. At IMF Statit it can be seen that the last month for which data is complete is October 2012. Data is only partial for the last two months of 2012 and very limited for January 2013. It will be the end of the second quarter before it will be known whether IP growth has cooled or turned down in the first quarter.
Here is the summary from Markit:
At 51.2 in March, up slightly from 50.9 in February, the JPMorgan Global Manufacturing PMI™ – a composite index* produced by JPMorgan and Markit in association with ISM and IFPSM – signaled expansion for the third straight month.
The overall rate of increase signaled by the headline PMI remained modest and below the long-run survey average. However, the average reading over Q1 2013 as a whole (51.2) was above that registered for the prior quarter (49.5).
Manufacturing production increased for the fifth successive month in March. Higher output was underpinned by a further increase in new order inflows and work on existing contracts. International trade volumes also rose during the latest survey period. Although the pace of growth in new export orders
was only marginal, it was an improvement on the declines recorded during the preceding 11 months.
The US led the global manufacturing output growth league table in March, and has now seen production rise throughout much of the past four years. The rate of expansion accelerated in China, while growth was recorded in Japan for the first time in ten months. Europe remained the main drag on the global manufacturing sector, with output declining in both the Eurozone and the UK.
Global manufacturing employment increased for the fourth consecutive month in March. However, with output and new order growth still relatively subdued, the rate of job creation was only slight. Employment rose in the US, Germany, Canada, Mexico, India, Brazil, South Korea, Turkey, Vietnam and Austria, and was held at broadly unchanged levels in China and Taiwan.
Average input prices rose for the seventh successive month in March, mainly reflecting higher costs in North America, Japan and Asian emerging market nations such as India, Indonesia and Vietnam. In contrast, the Eurozone and China both reported lower purchase prices.
PMI data also signaled that (on average) global manufacturers were struggling to pass through higher costs to their clients in the form of increased selling prices. Average output charges rose only negligibly in March.
Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said:"According to the global PMI, the manufacturing sector
continued to expand in March. Indexes of output and new
orders rose slightly to levels consistent with moderate, stable growth in global production."
- Global manufacturing PMI edges higher in March (Press release, Markit, 02 April)
- Industrial Production (IMF Stat, as of 02 April 2013)
- Eurozone: Manufacturing Downturn Deepens in March (GEI News, 02 April 2013)