Global Manufacturing Rate Stays Course

Key output orders and components are starting to rally.

Global manufacturing sector steadied in December according to the JPMorgan Global Manufacturing PMI of 53.3, unchanged from November's fifteen-month low. Slightly slower growth in the Asia-Pacific region was offset by a recovery in the U.S. manufacturing sector according to the report released on Jan. 3. In the European area growth remained robust.

The Global Manufacturing Output Index remained unchanged from November. At its current level, the index is consistent with production growth of around 2.0- 2.5%, down noticeably from the robust pace of over 5% seen earlier in the year.

"PMI data suggest that the rebalancing of global manufacturing expansion following the highs earlier in 2006 continued into December. Signs are that the trends of the key output and new orders components are starting to rally, which should ensure that this is a soft landing. Manufacturers should also see further respite from cost inflationary pressures at the start of 2007," said David Hensley, director of Global Economic Coordination at JP Morgan.

The Eurozone saw strong expansions recorded for Germany, Spain and Austria, while growth was subdued in. Japan and China. The U.S saw only a slight expansion of production, although this was positive compared to the contraction posted in November, reported JPMorgan.

At 53.9 in December, the level of the Global Manufacturing New Orders Index was unchanged from one month earlier, however the rate was characterized as relatively robust since both growth for production and new orders were higher in 2006 than in 2005.

At 58.0 in December, the Global Manufacturing Input Prices Index posted its lowest level since July 2005. However, at 51.8, the Global Manufacturing Employment Index signaled that the rate of job creation was the least marked for six months. Employment increased in the Eurozone, Japan and China, but declined in the U.S. and the UK.

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