Global economy may have accelerated at end of last year

The global economy continued to grow in December, supported by growth in the United States and the euro area.

In fact, surveys of purchasing managers around the world showed that industry activity as a whole accelerated in December. Most of the indices compiled by JPMorgan and Markit showed increases last month.

JPMorgan Global All-Industry Indices
	November	December
Output	54.5	57.1
New orders	54.6	57.0
Input prices	60.2	63.2
Employment	52.0	51.1

The December reading of 57.1 for the JPMorgan global all-industry output index was its highest level since April.

The purchasing managers' reports from the Institute for Supply Management showed that the economy accelerated in the United States in December. The ISM's manufacturing PMI rose to 57.0 in December from 56.6 in November while the non-manufacturing index rose to 57.1 from 55.0.

Despite the acceleration in economic growth indicated by the ISM data, the Labor Department's employment report released on Friday showed that the US economy continued to add jobs at a relatively slow rate at the end of 2010. Based on the establishment survey, the US economy gained 103,000 jobs in December.

Nevertheless, there were some positives in the report. Job gains in November and October were revised up by a total of 70,000 to 71,000 and 210,000 respectively. In addition, the household survey showed that the economy gained 297,000 jobs in December, and together with a fall in the labour force participation rate, helped drive the unemployment rate down to 9.4 percent, the lowest rate since May 2009.

In the euro area, the purchasing managers' reports showed that the economy continued to grow in December. The Markit eurozone composite output index held at 55.5 in December, the same as in the previous month. The manufacturing PMI rose to 57.1 in December from 55.3 in November but the services PMI fell to 54.2 from 55.4.

Adding to evidence of continuing growth in the eurozone economy, the European Commission reported last week that its economic sentiment indicator for the euro area rose to 106.2 in December from 105.1 in November. This was its seventh consecutive month of increase.