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News : Global Economy Last Updated: Aug 27, 2014 - 10:38 PM

Global growth in manufacturing and services accelerated in July
By Finfacts Team
Aug 6, 2014 - 8:57 AM

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The global economy made a solid start to the third quarter, as output growth in manufacturing and services accelerated to its highest rate in almost three-and-a-half years. The further expansion in business activity was underpinned by robust inflows of new orders, encouraging both manufacturers and service providers to raise employment.

At 55.5 in July, up slightly from 55.4 in June, the JPMorgan Global All-Industry Output Index - - which is produced by JPMorgan and Markit in association with ISM  (US Institute of Supply Management) and IFPSM (International Federation of Purchasing and Supply Management) - - signalled an increase in combined manufacturing and service sector output for the twenty-second successive month.

Markit says that the acceleration in the latest survey period was centred on the service sector, where the pace of activity growth was the fastest since April 2010. A solid expansion was also signalled for manufacturing production, despite the pace of increase easing slightly from the previous month.

The upturn was led by the robust performances of the US and the UK. The rate of growth in the US was only marginally below June’s (Markit) series record high, while the UK also continued to expand at a pace that was among the highest in the respective survey history.

The Eurozone output index rose to a three-month high in July. Stronger readings from the service sector surveys indicated improved conditions in the currency union’s domestic markets, which offset an export-led slowdown at manufacturers. Growth accelerated in Germany and Spain, slowed in Italy, while France contracted.

China and India reported slower rates of increase in all-industry output during July, as stronger manufacturing growth was offset by slowdowns in services. Japan stagnated, growth accelerated in Russia and Brazil contracted.

Employment rose for the fifty-third successive month in July. However, the rate of increase eased from June’s high, as the all-industry employment index gave back the gains achieved in the prior month. Payroll numbers increased in the US, the UK, the eurozone, Japan, China and Brazil.

On the price front, average output charges and input costs both rose at slower rates during July. The increase in selling prices was only slight.

Commenting on the survey, Joseph Lupton, senior economist at JPMorgan, said: "The July manufacturing and service sector PMI surveys signal a robust start to the second half of the year, with growth of all-industry output ticking higher to its fastest pace since February 2011. Service sector growth continued to strengthen in July, offsetting a mild deceleration in factory output, while new order inflows remain solid overall.

"Taken together, the July surveys point to global GDP growth running well above its trend in the third quarter. In the event, this would mark a welcome relief following the disappointing first-half of the year."

The Global Report on Manufacturing & Services is compiled by Markit based on the results of surveys covering over 16,000 purchasing executives in 32 countries. Together these countries account for an estimated 86% of global gross domestic product (GDP).

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