Markit Economic Research
04/02/2015
Global economy
January’s PMI surveys signal first global growth upturn for six months
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Global PMI rises from 14-month low in January
Global economic growth
New orders grow at slowest rate since May 2013
Growth picked up in US, UK and Eurozone
Russia and Brazil see further downturns
The global economy started 2015 on a weak footing,
according to PMI survey data, although the rate of
expansion picked up slightly compared with
December’s 14-month low.
The JPMorgan Global PMI, compiled by Markit from its
worldwide manufacturing and services PMI surveys,
edged up from 52.4 in December to 52.8, signalling the
first acceleration of growth for six months. However,
the index remains consistent with global GDP rising at
an annual rate of just 2.0%; far below typical pre-crisis
growth rates.
Global employment and new orders
Whether growth will revive further in coming months is
uncertain. Order books showed the smallest rise since
May 2013, suggesting the pace of growth could
weaken again in February. A common threat to the
PMI survey was that firms and their customers remain
cautious in relation to spending, in turn often linked to
the ongoing fragility of the global economy and its
susceptibility to risks. Companies around the world
noted increased geopolitical concerns, including the
Greek debt crisis and the crisis with Russia, as well as
uncertainties surrounding currency fluctuations,
notably the increased strength of the US dollar.
However, employment growth held up in January, and
firms even took on staff at a slightly increased rate,
suggesting employers may be seeing the softness in
demand as temporary.
Global manufacturing and services
There are reasons to support such optimism, as the
survey also recorded the smallest monthly increase in
firms’ costs since September 2009. Companies in both
manufacturing and service reported downward
pressure on costs from lower oil prices in particular.
Lower costs should help to drive global headline
inflation rates down further in coming months, boosting
household spending.
Continued…
Sources for all charts: Markit, JPMorgan, HSBC
Markit Economic Research
The announcement from the ECB that the euro area’s
central bank will embark on full-scale quantitative
easing should also help boost business confidence.
Developed world
Growth upturn in Eurozone, US and UK
Growth ticked higher in both manufacturing and
services in January, though in both cases remained
well below the peaks seen last year.
Growth rates also picked up in the US and the UK,
which had both led the economic upturn in 2014.
However, both countries’ PMIs are running at levels
consistent with 0.5-0.6% quarterly GDP growth in the
first quarter (2.0-2.5% annualised), similar to that seen
in the closing quarter of last year but far below the
strong rates seen prior to the fourth quarter.
Emerging markets
Growth also picked up in the eurozone for a second
month running, reaching a six-month high and
suggesting that GDP growth should accelerate from
the marginal 0.1% expansion seen in the final quarter
of 2014. The index for the region as a whole is running
at a level consistent with 0.2-0.3% GDP growth so far
in the first quarter, but there are substantial variations
within the region. Ireland and Spain are seeing strong
growth spurts, and the pace of expansion is picking up
in Germany and Italy. France, in contrast, continued
to register a marginal contraction of business activity,
suggesting its GDP will stagnate at best in the first
quarter unless business picks up.
Asia struggles, Russia and Brazil decline
Business conditions meanwhile remained lacklustre in
much of Asia. China’s PMI survey recorded the
weakest monthly expansion for eight months,
suggesting GDP growth will weaken from the 7.3%
rate seen in the fourth quarter.
Chris Williamson
Chief Economist
Markit
Tel: +44 207 260 2329
Email: [email protected]
Click here for more PMI and economic commentary.
In Japan, the rate of expansion signalled by the PMI
slipped from December’s nine-month high due to
weaker service sector growth, but the surveys remain
consistent with the economy continuing to slowly
recover from the brief recession seen last year.
For further information, please visit www.markit.com
The PMI surveys for India signalled faster growth,
continuing the country’s best growth spell since early2013, but in Brazil and Russia ongoing declines were
seen. Brazil looks to have slipped back into recession
and Russia – hit by sanctions and the collapse in the
oil price – is seeing its steepest downturn since 2009.
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