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Global growth backtracks to three-year lows amid worsening trade picture
The following is an extract from IHS Markit's monthly PMI overview presentation. For the full report please click on the link at the bottom of the article.
At 51.3 in August, the JPMorgan Global PMI™, compiled by IHS Markit, fell from 51.6 in July to backtrack closer to the three-year lows seen in May and June. The index, which measures changes in total output across both manufacturing and service sectors, correlates well with GDP growth, and hints that the annual pace of global economic growth (at market prices) has slowed to around 2% in recent months, down markedly from 3% at the end of 2017.
The key driver of the recent slowdown has been a decline in global trade. Goods exports fell at the sharpest rate since October 2012, dropping for a twelfth successive month in August. Although factory output stabilised after two months of declines, the performance was still one of the weakest seen over the past seven years. Global service sector growth remained more resilient than manufacturing, but nevertheless waned to the second-weakest in three years.
Chris Williamson, Chief Business Economist, IHS
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Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
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