Despite the markets showing their dismay when the manufacturing PMIs for May were published, the pace of expansion in the global economy has actually picked up!
The JPMorgan Global Composite PMI, which takes the manufacturing and non-manufacturing/services into account, rose to 52.6 from 51.8 in April (a number above 50 indicates expansion) as the turnaround of Japan since the twin disaster seems to be lending solid support.
Sources: ISM, Markit, CFLP, Plexus Asset Management.
| GDP-weighted/ Composite PMI | Direction | Rate of change | ||
| Country | May-11 | Apr-11 | ||
| US*** | 54.3 | 54.6 | Growing, robust | Slower |
| Eurozone**** | 55.2 | 57.1 | Growing, robust | Slower |
| Germany* | 57.1 | 59.2 | Growing, robust | Slower |
| France* | 60.3 | 62.4 | Growing, robust | Slower |
| UK**** | 53.3 | 54.4 | Growing | Slower |
| Japan* | 46.2 | 35.0 | Contracting | Significant improvement |
| Emerging economies | ||||
| China** | 57.9 | 58.7 | Growing, robust | Slower |
| Brazil* | 53.0 | 52.5 | Growing | Faster |
| India* | 57.7 | 60.7 | Growing, robust | Slower |
| Russia* | 55.4 | 55.4 | Growing, robust | Slower |
| Hong Kong* | 52.2 | 52.9 | Growing | Slower |
| UAE* | 56.0 | 57.5 | Growing, robust | Slower |
| Saudi Arabia* | 62.6 | 62.7 | Growing, robust | Slower |
| JPMorgan Global Composite* | 52.6 | 51.8 | Growing | Faster |
Sources: *Markit; **CFLP, Li & Fung, Plexus Asset Management; ***ISM, Plexus Asset Management; ****Markit, Plexus Asset Management.
The contraction in Japan has eased significantly, with the Markit composite PMI jumping to 46.2 from 35.0 in April. Growth in the US eased slightly with my ISM GDP-weighted composite PMI registering 54.3 compared to April’s 54.6. The manufacturing and non-manufacturing PMIs reversed roles – the non-manufacturing PMI jumped to 54.6 from 52.8 while the manufacturing PMI sank to 53.5 from a very robust 60.4.
Growth in the Eurozone’s economy at long last eased with my GDP-weighted PMI coming in at 55.2 compared to 57.1 in April. Although the pace of growth in both Germany and France has eased, these countries continue to find themselves growing at a rapid pace. Elsewhere the pace has eased somewhat in China, the UK, Hong Kong and India.
Except in the case of Japan, where the manufacturing sector expanded again after reeling in the face of the twin disaster, growth in the global manufacturing sector has eased significantly. My GDP-weighted manufacturing PMI for the major economies dropped by 2.4 points to 53.1 in May.
The USA’s manufacturing sector was hit the hardest, succumbing 6.9 index points, followed by Germany’s 4.3 and the Eurozone’s 3.4 index point declines. The manufacturing sectors in the Eurozone’s problem countries are struggling, though.
The contraction in Greece has deepened, Spain has moved into contraction while Ireland’s PMI fell heavily from 56.0 to 52.1. China’s CFLP manufacturing PMI was in line with my earlier expectations based on seasonal weakness. Brazil was the only economy that managed to eke out a faster rate of expansion.
| Manufacturing PMI | Direction | Rate of Change | ||
| Country | May-11 | Apr-11 | ||
| US***** | 53.5 | 60.4 | Growing | Slowed significantly |
| Eurozone* | 54.6 | 58.0 | Growing | Slowed significantly |
| Germany* | 57.7 | 62.0 | Growing, robust | Slowed significantly |
| France* | 54.9 | 57.5 | Growing | Slowed significantly |
| Greece* | 44.5 | 46.8 | Contracting | Deeper |
| Italy* | 52.8 | 55.5 | Growing | Slowed significantly |
| Spain* | 48.2 | 50.6 | Contracting | From growing |
| Ireland* | 51.8 | 56.0 | Growing | Slowed significantly |
| U.K.* | 52.1 | 54.6 | Growing | Slowed significantly |
| Japan* | 51.3 | 45.7 | Growing | From contracting |
| Australia* | 47.7 | 48.4 | Contracting | Deeper |
| Emerging economies | ||||
| Brazil* | 50.8 | 50.7 | Growing, weak | Faster |
| China** | 52.0 | 52.9 | Growing | Slower |
| Czech* | 55.9 | 59.0 | Growing, robust | Slowed significantly |
| Poland* | 52.6 | 54.4 | Growing | Slower |
| Turkey* | 50.6 | 52.7 | Growing, weak | Slowed significantly |
| India* | 57.5 | 58.0 | Growing, robust | Slower |
| Russia* | 50.9 | 52.1 | Growing, weak | Slower |
| Taiwan* | 54.9 | 58.2 | Growing | Slowed significantly |
| RSA*** | 55.1 | 56.4 | Growing, robust | Slower |
| S Korea | 51.2 | 51.7 | Growing | Slower |
| Global**** | 53.1 | 55.5 | Growing | Slowed significantly |
Sources: Markit*; Li & Fung**; Kagiso***; Plexus Asset Management****; ISM*****.
Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****
Non-manufacturing/Services PMIs
The JPMorgan Global Services PMI for May jumped to 52.5 from 51.0 in April. The US ISM non-manufacturing PMI retraced 1.8 index points of the 4.5 index point drop in April.
Sources: ISM, Markit, CFLP, Plexus Asset Management.
| Non-manufacturing/ Services PMI | Direction | Rate of Change | ||
| Country | May-11 | Apr-11 | ||
| US** | 54.6 | 52.8 | Growing | Faster |
| Eurozone | 55.4 | 56.7 | Growing, robust | Slower |
| Germany | 56.1 | 56.8 | Growing, robust | Slower |
| France | 62.5 | 62.9 | Growing, robust | Slower |
| Italy | 50.1 | 52.2 | Growing | Slowed significantly |
| Spain | 50.9 | 50.4 | Growing | Faster |
| Ireland | 50.5 | 50.2 | Growing | Faster |
| UK | 53.8 | 54.3 | Growing | Slower |
| Japan | 43.8 | 35.0 | Contracting | Improved significantly |
| Australia | 49.9 | 51.5 | Contracting | From expanding |
| Emerging economies | ||||
| Brazil | 53.3 | 53.2 | Growing | Faster |
| China* | 61.9 | 62.5 | Growing, robust | Slower |
| India | 57.7 | 59.2 | Growing, robust | Slower |
| Russia | 57.6 | 55.8 | Growing, robust | Faster |
| JPMorgan Global Services | 52.5 | 51.0 | Growing | Faster |
Sources: Markit; CFLP*; ISM**; Plexus Asset Management.
The Eurozone PMI dropped by 1.3 index points to 55.4 from 56.7 in April, with the countries other than Germany and France taking the biggest knocks. Growth in Italy’s services sector has decelerated sharply, whereas Spain and Ireland continue to find themselves on the brink of contraction. Growth in the UK’s services sector eased slightly to 53.8 from 54.3 in May.
The pace of contraction in Japan has eased significantly by 8.8 index points to 43.8 in May from 35.0 in April. Australia’s services sector is contracting again.
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