The growth rate of global economic output eased to a 27- month low in December. At 52.7, the J.P.Morgan Global Composite Output Index1,2 – which is produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – posted its lowest reading since September 2016, one that was consistent with a modest expansion of economic activity across manufacturing and services. 

Due to later-than-usual release dates, final data for the Japan Manufacturing PMI and Japan Services PMI were not available to include in the global readings. In the case of manufacturing, flash PMI data were used as a substitute.  

The consumer goods and financial services sectors were the best performing sub-industries in December, with rates of output growth accelerating to eight- and five-month highs respectively. Output expanded at comparatively subdued rates in the business services, consumer services and intermediate goods categories and stagnated in the case of investment goods. The lacklustre performance of the latter reflected a slight decrease in new order intakes, the second in the past three months. 

National PMI data indicated that the US remained one of the best performers, despite seeing its rate of output growth ease slightly from November. Above globalaverage rates of expansion were also seen in Spain,India, Russia, Australia and Ireland.  

The euro area was the main source of the slowdown, with output growth across the currency union the weakest since November 2014. France contracted for the first time in two-and-a-half years, mainly due to the impact of the ‘yellow vest’ protests. Rates of expansion slowed in Germany (66-month low) and Spain (three-month low), while Italy stagnated. China, the UK and Brazil all saw modest growth accelerations.

Total new business in the global economy rose at the slowest pace since September 2016, with decelerations signalled at manufacturers and service providers alike. International trade flows deteriorated for the second time in the past four months. Weaker upturns in output and new orders also filtered through to the trends in employment and business confidence. 

Job creation slowed to a 20-month low, while the degree of optimism regarding performance in one year’s time was the weakest in two-and-a-half years. Staffing levels still rose in all nations except China and Brazil. 

Commenting on the survey, David Hensley, Director of Global Economic Coordination at J.P.Morgan, said: 

“The global economy ended 2018 on a subdued note, with the rate of output expansion slowing to a 27-month low. This mainly reflected the ongoing weakness in new order intakes, especially a second fall in international trade of goods and services during the past four months. The trend in new export business will need to show meaningful signs of revival early in 2019 if global economic growth is to make meaningful strides forward in the coming months.”