Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.
The June JP Morgan Global Composite PMI, which takes both the manufacturing and non-manufacturing/services into account, dropped to 52.2 from 52.6 in May (a number above 50 indicates expansion).
The slowdown in growth was broad based, with weakness particularly evident in countries in the Eurozone with France leading the way as the country’s Markit composite PMI fell 5.4 points to 54.9 in June from a robust 60.3 in May. Germany’s Markit composite PMI was reasonably resilient, contracting by 0.8 points. The Eurozone’s composite PMI fell to 53.2 from 55.2, with the manufacturing PMI down 2.6 points to 52.0 and the services PMI down 1.7 points to 53.7. The situation in the Eurozone’s debt-ridden countries is worsening, though.
| Manufacturing PMI | Services PMI | |||||||
| June 2011 | May 2011 |
Change |
Trend |
June 2011 | May 2011 |
Change |
Trend |
|
| Greece | 45.4 | 44.5 | +0.9 | Contracting | N/A | N/A | Contracting* | |
| Italy | 49.9 | 52.8 | -2.9 | Contracting | 47.4 | 50.1 | -2.7 | Contracting |
| Spain | 47.3 | 48.2 | -0.9 | Contracting | 50.2 | 50.9 | -0.7 | Barely growing |
| Ireland | 49.8 | 51.8 | -2.0 | Contracting | 52.4 | 50.5 | +1.9 | Expanding |
The contraction in Japan continues to ease, with the Markit composite PMI jumping to 47.6 from ??? in May. Growth in the U.S. eased slightly, with my ISM GDP-weighted composite PMI registering 53.8 from 54.3 in May. The manufacturing and non-manufacturing PMIs again reversed roles, with the non-manufacturing PMI falling to 53.3 from 54.6 while the manufacturing PMI rose to 55.3 from 53.5. My composite PMI for China slumped from 57.9 in May to 54.6 mainly due to seasonal factors as on a seasonally adjusted basis the PMI dropped slightly to 54.6 from 57.9. Elsewhere the composite PMIs for Brazil and Hong Kong retreated rapidly.
Sources: ISM, Markit, CFLP, Plexus Asset Management.
| GDP-weighted/ Composite PMI | Direction |
Rate of change |
||
| Country | June-11 | May-11 | ||
| U.S.*** | 53.8 | 54.3 | Growing | Slower |
| Eurozone**** | 53.2 | 55.2 | Growing | Slowed rapidly |
| Germany* | 56.3 | 57.1 | Growing, robust | Slower |
| France* | 54.9 | 60.3 | Growing | Slowed rapidly |
| U.K.**** | 53.2 | 53.3 | Growing | Slower |
| Japan* | 47.6 | 46.2 | Contracting | Improving |
| Emerging Economies | ||||
| China** | 54.6 | 57.9 | Growing | Slowed rapidly |
| China S/A** | 54.3 | 54.7 | Growing | Slower |
| Brazil* | 51.1 | 53.0 | Growing | Slowed rapidly |
| India* | 56.8 | 57.7 | Growing, robust | Slower |
| Russia* | 53.8 | 55.4 | Growing | Slower |
| Hong Kong* | 50.3 | 52.2 | Hardly growing | Slowed rapidly |
| U.A.E.* | 55.2 | 56.0 | Growing, robust | Slower |
| Saudi Arabia* | 62.8 | 62.6 | Growing, robust | Faster |
| JP Morgan Global Composite* | 52.2 | 52.6 | Growing | Slower |
Sources: *Markit; **CFLP, Li & Fung, Plexus Asset Management; ***ISM, Plexus Asset Management; ****Markit, Plexus Asset Management.
Growth in the global manufacturing sector eased slightly, with my GDP-weighted manufacturing PMI for the major economies dropping marginally to 52.8 from 31.1 in May.
The turnaround in the U.S.’s manufacturing sector from 53.5 to 55.3 prevented the gauge from dropping severely drop, though. Although growth in the Eurozone’s manufacturing sector is continuing, it has softened considerably. Germany’s PMI came in 3.1 points lower following its drop of 4.3 in May. The Eurozone followed its 3.4 index point decline in May by a further drop of 2.6 points to 52.0. The decline in China’s CFLP manufacturing PMI of 1.1 points was in line with my earlier expectations based on seasonal weakness, while on a seasonal basis growth improved marginally. Australia’s manufacturing sector experienced a significant turnaround, with the PMI reversing from a contracting 47.7 to an expanding 52.9. Turkey was the only other country experiencing faster growth in its manufacturing sector.
|
Manufacturing PMI |
Direction |
Rate of Change |
||
| Country | June-11 | May-11 | ||
| U.S.***** | 55.3 | 53.5 | Growing | Faster |
| Eurozone* | 52.0 | 54.6 | Growing | Slowed significantly |
| Germany* | 54.6 | 57.7 | Growing | Slowed significantly |
| France* | 52.5 | 54.9 | Growing | Slowed significantly |
| Greece* | 45.5 | 44.5 | Contracting | Improving |
| Italy* | 49.9 | 52.8 | Contracting | From growing |
| Spain* | 47.3 | 48.2 | Contracting | Faster |
| Ireland* | 49.8 | 51.8 | Contracting | From growing |
| U.K.* | 51.3 | 52.1 | Growing | Slowed |
| Japan* | 50.7 | 51.3 | Growing | Slower |
| Australia* | 52.9 | 47.7 | Growing | Deeper |
| Emerging Economies | ||||
| Brazil* | 49.0 | 50.8 | Contracting | From growing |
| China** | 50.9 | 52.0 | Growing | Slower |
| China S/A** | 52.0 | 52.0 | Growing | Unchanged |
| Czech* | 55.1 | 55.9 | Growing, robust | Slower |
| Poland* | 51.2 | 52.6 | Growing | Slower |
| Turkey* | 52.3 | 50.6 | Growing | Faster |
| India* | 55.3 | 57.5 | Growing, robust | Slower |
| Russia* | 50.6 | 50.9 | Growing | Slower |
| Taiwan* | 49.9 | 54.9 | Contracting | From growing |
| R.S.A*** | 53.9 | 55.1 | Growing | Slower |
| S Korea | 51.1 | 51.2 | Growing | Slower |
| Global**** | 52.8 | 53.1 | Growing | Slower |
Sources: Markit*; Li & Fung**; Kagiso***; Plexus Asset Management****; ISM*****.
Sources: Markit*; Li & Fung**; Plexus Asset Management****; ISM*****.
Non-manufacturing/Services PMIs
The JP Morgan Global Services PMI for June dropped by 0.4 points as the PMI slid to 52.1 from 52.5 in May.
The U.S. ISM non-manufacturing PMI retraced 1.3 index points on top of the 1.8 index point drop in May to a still expanding 53.3. The Eurozone PMI dropped by 1.7 index points after a retreat of 1.3 index points in May to finish at a still expanding 53.7 in June as France in particular came off the boil with the PMI dropping by a massive 6.4 points to 56.1 in June. Growth in the U.K.’s services sector picked up slightly to 53.9 from 53.8 in May. The pace of contraction in Japan’s services sector continued to ease as the PMI rose by 1.6 points to 45.4 in June. The pace of contraction in Australia’s services sector intensified, though.
Sources: ISM, Markit, CFLP, Plexus Asset Management.
| Non-manufacturing/ Services PMI |
Direction |
Rate of Change |
||
| Country | Jun-11 | May-11 | ||
| U.S.** | 53.3 | 54.6 | Growing | Slower |
| Eurozone | 53.7 | 55.4 | Growing | Slower |
| Germany | 56.7 | 56.1 | Growing, robust | Faster |
| France | 56.1 | 62.5 | Growing, robust | Slowed rapidly |
| Italy | 47.4 | 50.1 | Contracting | From growing |
| Spain | 50.2 | 50.9 | Growing | Slower |
| Ireland | 52.4 | 50.5 | Growing | Faster |
| U.K. | 53.9 | 53.8 | Growing | Faster |
| Japan | 45.4 | 43.8 | Contracting | Improved |
| Australia | 48.5 | 49.9 | Contracting | Faster |
| Emerging Economies | ||||
| Brazil | 52.1 | 53.3 | Growing | Slower |
| China* | 57.0 | 61.9 | Growing, robust | Slowed rapidly |
| China S/A* | 57.7 | 58.8 | Growing, robust | Slowed |
| India | 56.1 | 57.7 | Growing, robust | Slower |
| Russia | 55.1 | 57.6 | Growing, robust | Slower |
| JP Morgan Global Services |
52.1 |
52.5 |
Growing |
Slower |
Sources: Markit; CFLP*; ISM**; Plexus Asset Management.
Global PMI roundup (June 2011): Mixed signals was first posted on July 9, 2011 at 9:20 am.
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