The rate of growth in the global private sector economy picked up last month, an indicator based on national surveys of manufacturing and services companies showed on Wednesday. The Global All-Industry Output Index, produced by JP Morgan together with research and supply organisations, hit its highest level so this year, rising to 57.1 in July from 55.9 in June, staying above the 50 line that divides growth from contraction.

The index, which measures output in both manufacturing and services sectors, is based on national purchasing managers index (PMI) data collected from around 10,000 purchasing executives in over 20 countries. The global PMI points to a pickup in growth of global GDP to a solid rate, said David Hensley, director of global economics coordination at JP Morgan. Strong underlying demand and higher employment suggest that the performance of the global economy is likely to be above previous expectations in the second half 2005, he added. The global services index edged up to 57.7 in July from 57.3 in June while the forward-looking new business index for services rose to a six-month high at 58.0 from 56.5. Improved global demand is driving the expansion of the world service economy, as economic conditions improve following the slight slowdown at the start of 2005, Hensley said.

The global services employment index hit a 15-month high in July, rising to 53.8 from 53.5 in June. National surveys this week showed manufacturing grew at a faster rate in Japan and the United States and returned to marginal growth in the euro zone. In Britain, manufacturing contracted thanks to weak consumer demand.

Reuters