NYREADERS.COM - Global output growth accelerated for a third straight month in January, according to the S&P Global Purchasing Managers' Index™ (PMI^®) surveys.

Looser financial conditions helped boost financial services activity and consumer spending, while manufacturing was also buoyed by a reduced focus on inventory reduction, S&P Global analyst Chris Williamson said in the report.

Growth picked up in the US, Japan, UK, India and Brazil, and downturns moderated in the eurozone, Canada and Australia. China's (mainland) economy also continued to expand.

Purchasing Managers' Index™ (PMI^®) data are compiled by S&P Global for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies and are available only via subscription.

The survey sub-indices hint at global growth gaining further momentum in the near term. New order inflows accelerated, helping stabilize backlogs of work and pushing worldwide business optimism about the year ahead to its highest since last June. These improvements in demand and sentiment meanwhile encouraged increased global hiring.

The survey meanwhile pointed to a further easing of global inflationary pressures, bolstering the likelihood that central banks will be able to lower interest rates to further aid the growth outlook. However, some price data are worthy of close monitoring in the coming months, notably around supply delays and producer input costs.

Global PMI

The global economy started 2024 on a stronger footing, with worldwide business activity growth hitting a seven-month high, according to the Global PMI data compiled by S&P Global.

At 51.8 in January, the headline PMI, covering manufacturing and services across over 40 economies and sponsored by JPMorgan, rose for a third consecutive month, signaling accelerating growth, S&P said.

Although the PMI remains well below the survey's long-run average of 53.2 and is broadly consistent with annualized quarterly global GDP growth of approximately 1.8% (below the pre-pandemic ten-year average of 3.0%), the upturn allays concerns of a global recession, and points to the worst impact of prior rate hikes has now passed.

Digging deeper into sectors, financial services reported by far the strongest expansion of the major industries tracked by the global PMI, fueled in turn by resurgent activity in the real estate, insurance and banking sectors.

These activities have been buoyed by looser financial conditions associated with expectations of interest rates falling in many economies in 2024.

Brighter outlook

The loosening of financial conditions and positive shift in the inventory cycle both add to signs that the global economy will gain further momentum in the months ahead. This view is supported by some of the other indices from the global PMI, S&P said.

New order inflows hit a seven-month high in January, with growth accelerating in services while the demand downturn within the manufacturing sector showed signs of stabilizing for the first time in over one-and-a-half years.

These improved new business metrics helped soften the rate of decline in backlogs of work to the smallest seen over the past nine months.

Future output expectations were also buoyed by the signs of improving demand, rising to the highest level since last June. Sentiment about prospects for the year picked up in both manufacturing and services. (*)