JP Morgan's Global Manufacturing Barometer Falls Sharply

JP Morgan said its Global Manufacturing PMI fell to a fifteen-month low in November, dragged down by softening in U.S. manufacturing conditions.

JP Morgan said its Global Manufacturing PMI fell to a fifteen-month low in November, dragged down by softening in U.S. manufacturing conditions.

The latest report came in at 53.3, and the the level of the Global Manufacturing PMI has fallen through much of the second half of the year, JP Morgan noted.

While the Eurozone Manufacturing PMI maintained its sideways trend and remained at an elevated level, the ISM U.S. Manufacturing PMI came in at 49.5, a level below the neutral 50 mark for the first time in over three-and-a-half years.

The U.S. saw production and new orders decline for the first time since April 2003, and U.S. manufacturing job losses were reported for the second time in the past three months. Growth of new export business remained strong in the U.S., suggesting the decline in total new business had been centered on the domestic market.

Global manufacturing production increased for the forty-third successive month in November, but the rate of expansion dropped to a one-and-a-half year low, the firm said. At its current level of 53.7, the Global Manufacturing Output Index is well below its average for the year-to-date (56.7), and its recent trend suggests that the sector has lost noticeable momentum so far during the second half of 2006.

Rates of expansion differed noticeably across the Eurozone, JP Morgan said. Growth was led by Germany, France, Italy, Spain and Austria, while rates of increase in output for the Netherlands, Ireland and Greece lagged well behind the Eurozone average.

Of the other major industrial regions covered by the survey, growth of production steadied in Japan, picked up in China and eased in the UK.

At 53.9 in November, the Global Manufacturing New Orders Index posted its lowest level since August 2005. The slowdown in the expansion of manufacturing new orders in recent months has been largely centred on the U.S. and also, to lesser extents, Japan andthe UK. Hungary and South Africa saw especially marked easing in their respective rates of increase for new business in November. Growth of new orders to the Eurozone steadied at a robust level, led by Germany.

Global manufacturing employment rose for the eighteenth successive month in November. However, JP Morgan said the overall rate of job creation fell to its lowest level since June, again largely as a result of a decline in U.S. manufacturing staffing levels.

Finally, after falling sharply from a high of 73.0 in July to a fifteen-month low of 59.5 in October, November saw a slight increase in the level of the Global Manufacturing Input Prices Index, to 61.0. China showed a substantial acceleration in its rate of increase for input prices. Costs also rose in the U.S., after declining in October.

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