Global manufacturing PMI climbs 1.3 points to 53.7

Markit Economics

February data indicated that growth of the global manufacturing sector recovered from the sluggish trend seen at the start of 2007. The JPMorgan Global Manufacturing Purchasing Managers’ Index rose from January's 1.5-year low of 52.4 to record a four-month peak of 53.7. The PMI was led higher by stronger trends in production, new orders and employment. Improved growth of international trade volumes also contributed to the latest expansion.


"The strength of global manufacturing expansion signaled by PMI data confounded expectations in February, with positive shifts signaled for output and new order growth,” said David Hensley, director of global economics coordination at JPMorgan. “It is still too early in the current cycle to confirm whether this will gain traction, as trends in some major industrial regions are still quite volatile. Expect growth in Q1 to be subdued overall, before a pick up in mid-2007."


The Global Manufacturing Output Index posted 55.3 in February, its highest reading since last September, to remain above the neutral 50.0 mark for the 46th successive month.


The robust performing Eurozone manufacturing sector remained the principal growth engine among the major industrial regions covered by the survey. However, there remained noticeable disparities between the rates of expansion for the four largest Euro area economies. While growth in Germany, Italy and Spain was robust, the performance of France was relatively muted (but an improvement on last month).


Although the underlying trend in United States manufacturing production remained relatively volatile, the Institute for Supply Management U.S. PMI Output Index recovered strongly to reach a five-month high of 54.1 in February.


Growth of output picked up in the Asia-Pacific region, with rates of expansion improving in Japan and China (to three and seven-month highs, respectively) as well as Australia (fastest since December 2004).


United Kingdom manufacturing has started 2007 on a progressively positive footing, with growth of output accelerating to a five-month high in February.


At 55.1 in February, the Global Manufacturing New Orders Index posted its highest reading for five months. Denmark, Switzerland and South Africa recorded the strongest growth of new work received. The trend in new orders was highly robust in the Eurozone (especially in the Netherlands and Germany). The U.S. posted a strong recovery in growth of new work, while new orders to Chinese manufacturers rose at the sharpest rate in seven months. Growth was relatively subdued in Japan. Rates of expansion for new business in the U.S., Japan and China were all below the global average.


Although the Global Manufacturing Input Prices Index, which posted 60.7 in February, pointed to a pick up in the rate of increase in average purchase prices, this was almost entirely the result of a marked acceleration of cost inflation in the U.S. The ISM U.S. Input Prices Index has risen by almost 12 points over the past two months, and is currently at a five-month high. In contrast, rates of cost inflation eased in the Eurozone, Japan (13-month low), China (least marked since last October) and the U.K.


At 52.5 in February, the Global Manufacturing Employment Index signaled the fastest job creation for six months. Employment rose in the Eurozone, the U.S. (after falling in the previous month), Japan, China and the U.K. (sharpest since March 2005).


February data pointed to a further easing in the build up of supply-side pressures, as average vendor performance deteriorated to its least marked extent since the end of 2005.

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