Source: Markit Economics

After slowing in the previous month, growth of the global private sector economy in manufacturing and services  accelerated in December. This was signalled by the JPMorgan Global All-Industry Output Index posting 53.4, up from the reading of 51.7 in November. The headline index has now remained above the neutral 50.0 mark in each of the past five months. The average output index reading in Q4 2009 was the highest since the final quarter of 2007.

Growth of overall activity was again led by the manufacturing sector in December. Manufacturing production has risen in each month since June with the rate of expansion accelerating to a level close to October's five-year high. Growth of business activity also picked up in the service sector following a slight loss of momentum one month earlier.

December data pointed to a further increase in new business, with gains reported in both the manufacturing and service sectors. Although the rate of increase in all-industry new orders eased for the second month running, it was broadly in line with those recorded before the start of the downturn in 2008.

Manufacturing new orders increased at the fastest pace for over five-and-a-half years, suggesting that the recovery in the sector maintained traction heading into 2010. Although growth of service sector new business was only modest and weaker than in November, it extended the current period of expansion into a fourth consecutive month.

Latest data indicated that the global labour market moved closer to stabilising in December. Although job losses were recorded for the twentieth successive month, the rate of decline was the slowest since August 2008. The reduction in staffing levels was mainly focussed on the service sector, as manufacturing employment increased, albeit only slightly, for the first time since March 2008.

Spare capacity remained in the global service sector, as levels of outstanding business declined for the 28th consecutive month in December. In contrast, the level of work-in-hand at manufacturers rose for the fourth month in a row. At 55.2 in December, up from 53.6 in November, the Global All-Industry Input Prices Index pointed to the sharpest rate of increase in average costs since August. Input prices have now risen in each of the past five months.

The faster rate of inflation was registered by manufacturers. Manufacturing purchase prices increased at the quickest pace since September 2008. Meanwhile, service sector costs rose for the third month running.

Commenting on the survey, David Hensley, Director of Global Economics Coordination at JPMorgan, said: "The latest PMI (Purchasing Managers' Index) data suggest a positive end to a tumultuous year for the global economy, as the second half of 2009 saw a marked shift into recovery territory. The upturns in the services and manufacturing sectors also regained momentum in December. The labour market is moving closer to stabilising, with jobs even being added in manufacturing."

The Global Report on Manufacturing & Services is compiled by Markit Economics based on the results of surveys covering over 11,000 purchasing executives in almost 30 countries.