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Global Manufacturing Purchasing Manager’s Index by Jennifer Chemel Ana C. Lopez Global Manufacturing Purchasing Managers Index Published by: JP Morgan Frequency: Monthly Period covered: Prior Month Market Significance: Moderate Composite and coincidental Indicator Website: http://www.ism.ws/files/ISMReport/JPM organ/JPMorganMfg020107.pdf What is it? A global economic indicator that provides the first look at global business conditions by measuring different conditions of 24 different countries The report surveys 7,000 purchasing managers from the selected countries Data is shown with a base of 50; a score higher than 50 indicates an increase in the variable, and a score lower than 50 indicates a decrease in the variable Countries Represented in the Global PMI What is in the report? Global Report on Manufacturing contains: • Global Manufacturing PMI: Composite indicator measuring overall economic conditions • Global All-Industry Output Index: Global indicator measuring output of the listed countries • Global All-Industry Input Prices Index: Global indicator measuring prices of input of the listed countries • Global All-Industry New Orders Index: Global indicator measuring new business for companies • Global All-Industry Employment Index: Global indicator measuring the general employment rate • Input Cost Inflation: The change in the price of inputs from one month to the next • Jobs Growth: The amount of new jobs created Why is it important? The 24 countries that the indicator gathers information from represent 82% of global economic output Gives an indication of economic conditions for exports in the U.S. Keys to Interpreting the Data Global GDP and the JP Morgan all-industry PMI move together • PMI Output index and Global IP move together • Interpreting the data The U.S. ISM index and the Global manufacturing PMI move together. Therefore the Global PMI further supports the state of the the economic manufacturing conditions in the U.S. U.S. ISM production 80 75 70 65 60 55 50 45 40 35 1998 U.S. ISM 50 no-change line 1999 2000 2001 2002 2003 2004 2005 2006 2007 Keys to Interpreting the Data Analyze all four indexes to get a better read on the state of the global economy Data is shown with a base of 50; a score higher than 50 indicates an increase in the variable, and a score lower than 50 indicates a decrease in the variable Latest Release Global Report on Manufacturing • JPMorgan Global Manufacturing PMI at 54.1, up from 52.9; 46th consecutive month of being above 50 • Output Index at 56.0, up from 54.5 • New Orders Index at 55.5, up from 53.4 • Input Prices Index at 65.8, up from 62.8 • Employment Index at 52.9, up from 51.5 Analysis Based on the information from this indicator, that being: The JP Morgan Global All-Industry Output Index is currently at a level of 54.1, which is consistent with a 3.0%-3.25% GDP Because the JP Morgan PMI is a coincident indictor and all its All indexes are increasing, global growth is expected to expand The expected expansion in the U.S. ISM due increased exports puts inflationary pressures in the U.S. economy Any questions?