July 6, 2015

Global Economic Analysis and News of Note

  • In June, the JP Morgan global purchasing managers’ index (PMI) fell to its lowest point (51.0) since July 2013. According to the bank, “The PMI surveys suggest the growth of manufacturing output remained subdued during the second quarter, with the rates of increase in new business and output slipping to their lowest since the first half of 2013. Activity in Asia, aside from China, is especially weak. Signs of stronger final demand growth toward midyear point to a pickup in production growth in coming months depending on the extent of any inventory drag.”
  • The Markit PMI for the Eurozone increased to 52.5 in June from 52.2 in May as readings in Germany and Austria both registered 14-month highs. Despite the improved reading, Markit said, “[T]he overall pace of expansion remains insipid rather than impressive. Although France’s factories have returned to growth for the first time in over a year, and the Netherlands, Ireland and Italy are all seeing especially strong rates of growth, the lackluster rates of expansion seen in Germany and France mean the PMI is broadly consistent with Eurozone manufacturing output rising by a mere 0.3% in the second quarter, providing only a modest boost for the wider economic recovery.” Meanwhile, the Markit PMI for the United Kingdom fell to 51.4 in June from 51.9 in May as rose at its slowest pace in nearly two years.
  • Readings from Asian countries continued to show significant weakness in June. The HSBC PMI for China ticked up slightly to 49.4 in June from 49.2 in May, but the report was the fourth month in a row that the index was below the all-important 50.0 mark that indicates contraction in the sector. According to HSBC, “The final reading of the HSBC China Manufacturing PMI pointed to a further decline in the health of the manufacturing sector … This was predominantly driven by the sharpest rate of job shedding across the sector since early-2009.” Meanwhile, the Nikkei PMI for Japan fell to 50.1 in June from 50.9 in May and “was the weakest this year so far.” Additionally, Nikkei’s PMI for Vietnam fell to 52.2 in June from 54.8 in May as the new orders and output readings both fell. Finally, the Nikkei reading for South Korea was at its lowest level in 33 months and Taiwan’s Nikkei PMI fell to 46.3 in June from 49.3 in May.
  • The Nikkei PMI for India fell to 51.3 in June from 52.6 in May as declines in both output and new orders weighed on the sector.
  • As a reminder, all PMI readings can be found here.