The JPMorgan Global PMI Composite Output Index rose by 11.4 points to 47.7 in June from 36.3 in May.
June saw a five-month high for the index, which is published in partnership with IHS Markit since COVID-19 began affecting Chinese markets, then the world. Indexes below 50 signal contraction, but increases towards, or beyond, 50 signify improvement.
Business sentiment improved in June, as economies reopened following COVID-19 lockdowns in March. The manufacturing and service sectors shrunk, but that slowed in June, and while there’s been some growth in orders, jobs, and output, full recovery will take one to two years. PMI levels for China, Australia, and France grew in June compared to the previous month. The JPMorgan Future Global Output Index increased by seven points from 50.5 in May to 57.5 in June, and a higher Future Index indicates greater optimism and expectations for growth.
The JPMorgan Global Services Business Activity Index increased by 12.9 points to 48 in June, up from 35.1 in May, however, the index marked five consecutive months contraction since it’s below 50. Interestingly, during June input costs increased for the first time in three months. Inflationary pressure on both input prices and output charges since February could affect growth rate as positive sentiment and investment grow.
The US Composite New Business Index rose to 49.9, near the stabilization mark of 50, despite new business being affected the past two years. International trade volumes fell for the 22nd successive month in June. The IHS Markit US Services Business Activity Index increased 10.4 points to 47.9 in June from 37.5 in May.
The IHS Markit/CIPS UK Construction Total Activity Index sharply increased by 26.4 points to 55.3 in June, from 28.9 in May. Total construction output grew as the UK construction supply chain opened after stoppages and business closures.
IHS Markit’s Eurozone Productivity PMI, compiled from national manufacturing and services PMI survey data, increased by 5.9 points to 43.1 in June from 37.2 in May. June’s PMI is the highest in three months, but general productivity losses had been encountered for an eighth straight month across the eurozone’s private sector.
The eurozone’s private sector challenges were led by Germany, France, and Italy. For example, Italy’s private sector workforce efficiency declined for a 13th straight month in June. The problems began prior to the COVID-19 crisis but worsened as the pandemic took hold, although it has since entered recovery. In June, France’s PMI was 42.6, Germany was 44.9, and Italy was 40.2.