Recovery of global economy lost further impetus in August, led by slower service sector growth
At 53.9 in August, the JPMorgan Global All-Industry Output Index signalled that world economic activity had expanded for the thirteenth successive month. However, the rate of increase eased further from April’s 34-month high to its weakest since February.
The manufacturing and service sectors continued to recover in August. Manufacturing production rose for the fifteenth month running and business activity at service providers has now increased in each month since August 2009. However, rates of growth eased further in both sectors. National PMI data pointed to slower rates of expansion for the US, the Eurozone and the UK in August. Growth accelerated in China, reaching a four-month high. Activity declined in Japan for the third successive month, reflecting the ongoing recession in services and a moderation in manufacturing sector growth.
New business increased at the weakest rate for a year in August, reflecting slower growth of new work at both manufacturers and service providers. National PMI data indicated that new business growth slowed sharply in the US and the UK, while Japan reported a contraction for the third month running. However, China reported the fastest increase in new work since April, following only modest gains in the previous two months. Growth also accelerated slightly in the Eurozone.
August saw employment rise for the sixth consecutive month. However, the increase at the headline level masked disparities between the manufacturing and service sectors. Manufacturing
employment increased for the eighth consecutive month, with jobs growth accelerating to a rate close to May’s post-recession peak. In contrast, service sector staffing was reduced for the first
time in five months. This disparity was most pronounced in the US. US manufacturing employment rose at the fastest pace since December 1983, but non-manufacturing sector jobs were cut to the greatest extent since January. Staffing levels rose in the Eurozone and China, but fell in Japan and the UK.
Average input prices rose for the thirteenth month in August, with the rate of inflation accelerating sharply to a three-month high. Costs rose in both the manufacturing and service sectors, with manufacturing seeing the faster pace of increase. The US and France reported the steepest rises in all-industry input costs in August.