Global economy improves despite disappointing US jobs data

Reports on the global economy last week were generally positive.

Surveys of purchasing managers around the world showed that the global economy accelerated in August. The JPMorgan global all-industry output index rose to 55.2 last month, its highest level since February 2011, from 54.0 in July.

JPMorgan Global All-Industry Indices
	Jul	Aug
Output	54.0	55.2
New orders	53.1	54.8
Input prices	55.4	53.9
Employment	51.0	52.2

In the United States, the Institute for Supply Management's manufacturing PMI rose to 55.7 in August from 55.4 in July while its non-manufacturing index rose to 58.6, the highest since December 2005, from 56.0.

Less positively for the US, Markit's manufacturing PMI for the country fell to 53.1 in August from 53.7 in July.

And employment increased by 169,000 in August, less than economists had expected. With the employment count in the previous two months being revised down by a total of 74,000 jobs, the latest employment report indicates a loss of momentum in US job creation.

Still, the employment situation in the US is far from bleak. Another report last week showed that initial claims for unemployment benefits fell 9,000 to 323,000 in the week ending 31 August, pulling the four-week moving average down 3,000 to 328,500, its lowest since October 2007.

In the euro area, the economy continued to show improvement with Markit's composite output index for the region rising to 51.5 in August from 50.5 in July. The manufacturing PMI rose to 51.4 from 50.3 and the service business activity index rose to 50.7 from 49.8.

China's economy also appears to be regaining momentum. The official manufacturing PMI from the National Bureau of Statistics and the China Federation of Logistics and Purchasing hit a 16-month high of 51.0 in August from 50.3 in July while HSBC's manufacturing PMI rose to 50.1 from 47.7.

In the services sector, the official non-manufacturing index fell to 53.9 in August from 54.1 in July but HSBC's services PMI rose to 52.8 from 51.3, pulling its composite output index for China back into expansion territory at 51.8 in August from 49.5 in July.

Japan's economy also showed signs of regaining momentum last week. Markit's composite output index for Japan rose to 51.9 in August from 50.7 in July, with the manufacturing PMI rising to 52.2 from 50.7 and the services business activity index rising to 51.2 from 50.6.

In addition, Japan's index of coincident economic indicators rose 0.9 point in July while its index of leading economic indicators rose 0.6 point.