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March 7, 2016

Global Economic Analysis & News Of Note: Global Manufacturing Sector Weakening

  • Output in Japan’s manufacturing sector expanded 3.7 percent from December 2015 to January 2016. It was the first increase in three months.
  • The J.P. Morgan global purchasing managers’ index (PMI) fell to 50.0, a 39-month low, last month as employment and new export orders dropped. The bank said, “The Global Manufacturing PMI posted at the stagnation mark in February, further highlighting the fragility of global industry at the start of the year. Inflows of new business and production volumes barely rose, while the trend in international trade deteriorated. Market conditions will need to improve in the short run if global manufacturing is to avoid falling back into contraction.”
  • The Markit PMI for the Eurozone fell to 51.2 in February from 52.3 in January as the factory sector in Germany hit a 15-month low. (France’s reading, however, was at a two-month high. Markit Chief Economist Chris Williamson said, “With factory output in the eurozone showing the smallest rise for a year in February, concerns are growing that the region is facing yet another year of sluggish growth in 2016, or even another downturn.” The Markit reading for the United Kingdom also fell, declining to 50.8 from 52.9 as output and employment weakened.
  • Manufacturing indices in Asia remained weak last month. Caixin’s PMI for China fell to 48.0 in February from 48.4 in January. According to the Caixin, “Output and total new orders both declined at slightly faster rates than at the start of 2016, which in turn contributed to the quickest reduction in staffing levels since January 2009.” The Nikkei reading for Japan fell to 50.1 from 52.3 as new orders and output declined. Nikkei’s PMI for India remained steady at 51.9 while readings for South Korea, Taiwan and Vietnam also declined.
  • As a reminder, all PMI readings can be found here