Global Double Dip Recession 2012In yet another indication that the European double dip recession of 2011 is going global and becoming a global double dip recession 2012, JP Morgan's Global Manufacturing PMI slid further below the break-even level of 50 last month, with some European and Asian nations experiencing their worst monthly contractions since the Global Financial Crisis.
Rising Risk of US Recession 2012With the rest of the world sliding deeper under water only a few countries are left with any chance at all of riding this double dip recession contagion out. For the United States, hope remains that it can withstand the gravitational pull of recession 2012. However, for the second month in a row, manufacturing also contracted here, albeit very mildly so, in both June & July.
What is of more concern is that along with the weakening US manufacturing sector, the consumer was already starting to retrench, having pared spending for three months in a row as of July, prompting ECRI to reaffirm their recession call, and, according to ECRI, showing that a new recession likely began in the US by early last month, at the latest.
JPMorgan Global Manufacturing PMI™
The global manufacturing sector slid further into contraction territory at the start of Q3 2012. At 48.4 in July, the JPMorgan Global Manufacturing PMI™ – a composite index produced by JPMorgan and Markit in association with ISM and IFPSM – posted its lowest level since June 2009.
The PMI remained below the neutral 50.0 mark for the second straight month, to signal back-to-back contractions for the first time since mid-2009. Europe remained the main source of weakness during July, while the performances of the US, Brazil and much of Asia were only sluggish at best.
Manufacturing PMIs for the Eurozone and the UK sank to their lowest levels for over three years. Within the euro area, the big-four nations fell deeper into recession, while Greece continued to contract at a substantial pace. Eastern Europe fared little better, with downturns continuing in Poland and the Czech Republic.
The ISM US PMI posted a sub-50.0 reading for the second successive month in July. Rates of contraction accelerated in Japan, South Korea, Taiwan and Vietnam, but eased slightly in Brazil and China. Brighter spots were Canada, India, Indonesia, Ireland, Mexico, Russia and South Africa, which all signalled expansion during the latest survey period.
Manufacturing production and new orders both fell for the second month running in July, with rates of contraction gathering pace. International trade volumes, meanwhile, declined to the greatest extent since April 2009.
Job losses were reported for the first time November 2009. With demand still weak and a sharp drop in backlogs suggesting spare capacity is still available, staffing levels could fall further in coming months.
Global Manufacturing PMI™ Summary
50 = no change on previous month.
Jun Jul Change Summary, rate of change
Global PMI 49.1 48.4 – Contracting, faster rate
Output 49.6 48.9 – Contracting, faster rate
New Orders 48.1 47.2 – Contracting, faster rate
Input Prices 44.8 44.5 – Falling, faster rate
Employment 51.0 49.5 – Falling, change of direction