Global Investor

Improved output

Gurumurthy K | Updated on November 22, 2014


Global PMI data indicates factory growth

Financial markets closely monitor the Manufacturing Purchasing Managers’ Index (PMI) data released on the first business day of every month for most countries.

A PMI reading above 50 indicates manufacturing growth, while a reading below 50 indicates contraction.

PMI data for the US and UK suggests a lull in output after a period of fast growth. The US PMI dropped to 55.8 in July from 57.3 in June. It has oscillated between 55.4 and 57.3 since February this year. UK’s PMI fell to 55.4 in July from 57.2 a month earlier and has hovered between 57.9 and 55.4 for almost a year now.

India’s manufacturing sector is in better shape than that of its BRICS (Brazil, Russia, India, China and South Africa) peers.

Its PMI surged to 53 in July, a 17-month high, after crawling in the April-June quarter. The PMI suggests that India’s manufacturing sector could gain further momentum in the coming months.

While China and Russia are in a growth phase, Brazil and South Africa are in contraction. South Africa’s Purchasing Managers Index tumbled to a record low of 46.4 in July after manufacturing production was hit by recent labour strikes. But with the strikes ending later in the month, there is hope that the PMI score could see a reversal.

Brazil’s PMI stood at 49.1 in July, up from 48.7 in June, signalling an improved outlook for the sector.

Published on August 17, 2014

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