Manufacturing and trade act as drags on global economy
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.
Global PMI lifts higher on back of stronger service sector expansion
The pace of global economic growth picked up in February from a near two-and-a-half year low at the start of the year, but remained among the weakest since 2016. The JPMorgan Global PMI, compiled by IHS Markit, rose from 52.1 in January to 52.6. Despite the rise, the PMI still suggests the global economy could struggle to expand at a rate in excess of 2.0% in Q1 (measured at market prices), down from an estimated 2.3% in Q4 2018 and a peak of 2.9% at the end of 2017.
The slowdown was led by a near-stagnation of manufacturing output, in turn largely attributable to a further downturn in global trade. Worldwide exports fell for a sixth straight month, dropping at the steepest rate since May 2016. In contrast, service sector growth perked up to a three-month high, offsetting the manufacturing slowdown, buoyed by faster inflows of new business, suggesting domestic market demand remains encouragingly robust in many key economies.
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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