No improvement in global economy

Data from purchasing managers' surveys and other reports last week indicated that there has been no improvement in global economic growth recently.

Surveys of purchasing managers around the world showed that global economic activity may have slowed again in August. The JPMorgan global all-industry output index fell to 51.1 last month from 51.7 in July.

JPMorgan Global All-Industry Indices
	July	August
Output	51.7	51.1
New orders	50.0	49.9
Input prices	51.7	56.0
Employment	49.6	51.0

In the United States, purchasing managers' surveys painted a mixed picture. The Institute for Supply Management's manufacturing PMI fell to 49.6 in August from 49.8 in July. However, its non-manufacturing index rose to 53.7 in August from 52.6 in July.

In the euro area, Markit's composite output index fell to 46.3 in August from 46.5 in July. The eurozone manufacturing PMI remained well below the neutral 50 mark even as it rose to 45.1 from 44.0. However, the services PMI fell to 47.2 from 47.9.

In China, manufacturing activity contracted in August. The manufacturing PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing fell below the 50 mark to 49.2 in August from 50.1 in July while HSBC's manufacturing PMI fell to 47.6 from 49.3.

China's services sector continued to grow though. The services PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing rose to 56.3 in August from 55.6 in July but HSBC's services PMI fell to 52.0 from 53.1.

In Japan, Markit's composite output index remained below the neutral 50 mark in August despite rising to 48.6 from 47.4 in July. The Markit/JMMA manufacturing PMI fell to 47.7 from 47.9 but the services business activity index rose to 49.3 from 47.5.

Beyond the purchasing managers' surveys, other economic data released last week also pointed to weakness.

The US employment report last Friday was disappointing with non-farm payrolls increasing by just 96,000 in August compared with 141,000 in July. A fall in the labour force helped push the unemployment rate down to 8.1 percent from 8.3 percent in July.

Another report on Friday showed that Japan's economy is weakening. The Cabinet Office's coincident index of economic indicators fell to 92.8 in July from 94.1 in June, its fourth consecutive decline.

Furthermore, a fall in the leading economic index to 91.8 in July from 93.2 in June, also the fourth consecutive decline, indicates that the Japanese economy is likely to weaken further in coming months.

This weakening in the Japanese economy follows growth of just 0.2 percent in the April-June quarter, according to a report from the Cabinet Office today. The growth rate was revised down from an initially-reported 0.3 percent.

Finally, a report in China over the weekend largely corroborated the data from the purchasing managers' surveys. Industrial production reportedly grew 8.9 percent in August from a year ago, down from 9.2 percent in July and the slowest rate of increase since May 2009. Fixed asset investment rose 20.2 percent between January and August compared to the year-earlier period, less than the 20.4 percent in the period from January to July.

However, retail sales in China held up in August, growing 13.2 percent from a year ago, up from 13.1 percent in July.