ALL: Global Manufacturing PMI

Global manufacturing PMI posted 50.1, up 0.5 points from December's 49.6. This signals slight expansion in operating conditions; however, regional differences remain apparent.

There was slight growth in new orders (50.8), manufacturing output (50.6) and future output (61.7). However, new export orders (49.4) and employment (48.5) contract further.

The mixed report is reflected regionally with India once again showing the strongest growth while Japan, the Eurozone and UK contracted. China's rate of expansion continues to strengthen while the US posted sudden growth with output hitting a 7-month high.

Staffing levels fell in January with increased employment in the US, Japan and India not able to offset the massive cuts in China (fastest in nearly five years), the Eurozone and the UK.

Price pressures also rose as input cost inflation accelerated to a 5-month high, leading to a steeper rise in selling price.

J.P. Morgan Global Manufacturing PMI gives an overview of the global manufacturing sector. It is based on monthly surveys of over 10,000 purchasing executives from 32 of the world’s leading economies, including the U.S., Japan, Germany, France and China which together account for an estimated 89 percent of global manufacturing output. It reflects changes in global output, employment, new orders and prices. The Global Manufacturing PMI is seasonally adjusted at the national level to control for varying seasonal patterns in each country and is produced by J.P. Morgan and Markit Economics in association with ISM and the International Federation of Purchasing and supply Management (IFPSM).

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. The J.P. Morgan Global Manufacturing PMI provides advance insight into the global manufacturing sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of global markets. The stock market likes to see healthy economic growth because that generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The J.P. Morgan Global Manufacturing PMI data give a detailed look at the manufacturing sector including the pace of manufacturing growth and the direction of growth for this sector. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. In addition, its sub-indexes provide a picture of output, employment, new orders and prices.