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Prieur du Plessis

With 25 years' experience in investment research and portfolio management, Dr Prieur du Plessis is one of the most experienced and well-known investment professionals in…

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Global PMI Scorecard: A Turn For the Better Led by the U.S. and China

The acceleration in global economic activity since the lows in October gained traction in December.

The JP Morgan Global Composite Index improved to 53.0 from 52.0 in November after falling to 51.4 in October. While the improvement in the composite PMI could virtually be attributed entirely to a significant improvement in business conditions in the U.S., the improvement in December was more broad based. The U.S. continues to lead the way, though, as my GDP-weighted Composite ISM PMI taking into account the Non-manufacturing Business Activity Index (the basis Markit uses to calculate the composite PMIs) instead of the PMI itself improved further to 55.7 from 55.4 in November. The manufacturing sector experienced accelerated growth increasing to 53.2 from 52.7. The ISM Business Activity Index remained unchanged at a relatively robust 56.2.

China, Brazil and India contributed significantly to the acceleration in global economic activity. China reversed the unseasonal slump in November in both the manufacturing and non-manufacturing sectors while Indian industries accelerated to near robust levels.

The contraction in the Eurozone's private sector eased markedly for the second consecutive month. My calculated GDP-weighted PMI for the Eurozone rose to 48.3 from 47.2 in November and 46.6 in October. After stagnating in November, growth in Germany's services sector is accelerating again while the services sector in France has stopped contracting. Elsewhere in the Eurozone the situation is dire to say the least, with the services sector in Ireland joining the contraction in the other debt-ridden Eurozone countries. However, the contraction in the Eurozone's manufacturing sector, including France and Germany, continues. The acceleration in growth in the U.K.'s services sector from near stagnation in November is noteworthy.

The situation in Australia' manufacturing and services sectors has stabilized while Japan is showing signs of acceleration in growth. The contraction in Hong Kong and Taiwan eased somewhat but the contraction in South Korea's manufacturing sector deepened. In the Middle East, Saudi Arabia's economy remains robust but growth in the Emirate states is faltering.

 

  GDP-weighted/ Composite PMI Direction Rate of change
Country Dec-11 Nov-11
U.S.*** 52.9 52.2 Growing Faster
U.S. BAI ***(note 1) 55.7 55.4 Growing Faster
Eurozone**** 48.3 47.2 Contracting Slower
Germany* 51.3 49.4 Growing From contracting
France* 50.0 48.8 Stagnated From contracting
U.K.**** 52.8 50.8 Growing Faster
Japan* 50.1 48.9 Stagnated From contracting
Emerging Economies        
China** 52.6 49.3 Growing From contracting
China S/A** 52.4 49.5 Growing From contracting
Brazil* 53.2 51.5 Growing Faster
India* 54.7 52.3 Growing Faster
Russia* 53.5 54.6 Growing Slower
Hong Kong* 49.7 48.7 Contracting Slower
UAE* 51.7 52.5 Growing Slower
Saudi Arabia* 57.7 58.1 Growing Slower
JP Morgan Global Composite* 53.0 52.0 Growing Faster

Note: ISM Non-manufacturing Business Activity Index used instead of Non-manufacturing PMI.
Sources: *Markit; **CFLP, Li & Fung, Plexus Asset Management; ***ISM, Plexus Asset Management; ****Markit, Plexus Asset Management.

GDP-Weighted/Composite PMI Dec 2011

 

  Non-manufacturing/ Services PMI Direction Rate of Change
Country Dec-11 Nov-11
U.S.** 52.6 52.0 Growing Faster
U.S. BAI*** 56.2 56.2 Growing Steady, robust
Eurozone 48.8 47.5 Contracting Slower
Germany 52.4 50.3 Growing Faster
France 50.3 49.6 Growing From contracting
Italy 44.5 45.8 Contracting Faster
Spain 42.1 36.8 Contracting Slower
Ireland 48.4 52.7 Contracting From growing
U.K. 54.0 52.1 Growing Faster
Japan 50.4 49.5 Growing From contracting
Australia 49.0 47.7 Contracting Slower
Emerging Economies        
Brazil 54.8 52.6 Growing Faster
China* 56.0 49.7 Growing From contracting
China S/A* 55.3 51.4 Growing Faster
India 54.2 53.2 Growing Faster
Russia 53.8 54.8 Growing Slower
JP Morgan Global Services 53.2 52.6 Growing Faster

Sources: Markit; CFLP*; ISM**; US Business Activity Index***; Plexus Asset Management.

 

Non-Manufacturing/Services PMI Dec 2011

 

  Manufacturing PMI Direction Rate of Change
Country Dec-11 Nov-11
U.S.***** 53.2 52.7 Growing Faster
Eurozone* 46.9 46.4 Contracting Slower
Germany* 48.4 47.9 Contracting Slower
France* 48.9 47.3 Contracting Slower
Greece* 42.0 40.9 Contracting Slightly slower
Italy* 44.3 44.0 Contracting Slight slower
Spain* 43.7 43.8 Contracting Slightly faster
Ireland* 48.6 48.5 Contracting Slightly slower
U.K.* 49.6 47.6 Contracting Slower
Japan* 50.2 49.1 Growing From contracting
Australia* 50.2 47.8 Growing From contracting
Emerging Economies        
Brazil* 49.1 48.7 Contracting Slower
China** 50.3 49.0 Growing From contracting
China S/A 50.5 48.3 Growing From contracting
Czech* 49.2 48.6 Contracting Slower
Poland* 48.8 49.5 Contracting Faster
Turkey* 52.0 52.3 Growing Slightly slower
India* 54.2 51.0 Growing Faster
Russia* 51.6 52.6 Growing Slower
Taiwan* 47.1 43.9 Contracting Slower
S Korea 46.6 47.1 Contracting Faster
Global**** 50.4 49.6 Growing From contracting

Sources: Markit*; Li & Fung**; Kagiso***; Plexus Asset Management****; ISM*****.

Manufacturing PMI Dec 2011

 

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