Global Manufacturing Economy on the Rise

JPMorgan has released its 2013 Global Manufacturing Purchasing Managers’ Index. According to the report, global manufacturing is on the rise. And after a particularly strong September, things are starting to head in the right direction.  

This report is a composite index designed to assess manufacturing growth as a global whole. It assesses the market based on a one hundred point scale, with 50 being the threshold indicating whether or not expansion is taking place.

Thus far, the global manufacturing market is sitting at a rate of 50.6 percent.

On a domestic level, the Institute for Supply Management has announced that the index of national factory activity has risen a half a point from 55.7 to 56.2 in September. This is the highest rating that U.S. manufacturing has received since 2011. The growth is a sign of encouragement as it comes following concerns of a reduced demand for U.S. products, as well as a decline in government spending. Part of this stagnation was attributed to a difficult sales market, which in turn affected output and orders. In September, however, the U.S. added 180,000 jobs which is now fueling manufacturing expansion.

Internationally, China experienced third quarter growth, as well. The purchasing managers’ index in China rose to 55.4 percent in September, which is up from 53.9 percent in August. This is the highest rating China has received since March, and is primarily related to increased activity in the services sector.

Over the past few months, there has been widespread concern as to the manufacturing state in Europe due to financial and political turmoil. This has directly affected the manufacturing market. Examples of this can be seen in Greece, which was forced to accept a midsummer bailout, and in Portugal where political unrest has drawn speculation that further manufacturing assistance might be needed. Surprisingly, however, manufacturing expanded during September and, in fact, its PMI reached a two and a half year high of 57.1 percent.

It is important to note that while even a modicum of economic growth is still a positive factor, there is a long way to go before total stabilization is achieved. The global manufacturing market will look to build on the small spark it has received in September for the rest of the year.

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