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
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
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).