Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.

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.

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.


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.

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. 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.


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.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.


Global PMI Scorecard: Growth accelerating was first posted on June 13, 2011 at 10:00 am.
©2011 “Investment Postcards from Cape Town“. Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at wordpress@investmentpostcards.com

Feed enhanced by the Add To Feed Plugin by Ajay D’Souza