FR: PMI Composite


Tue Jan 06 02:50:00 CST 2015

Consensus Actual Previous
Composite - Level 49.1 49.7 47.9
Services - Level 49.8 50.6 47.9

Highlights
The French economy closed out 2014 on a stronger than previously supposed footing. Hence, courtesy of a 0.8 point upward revision to the service sector PMI (which now stands at 50.6) the final composite output index weighed in at 49.7, some 0.6 points above its flash estimate and nearly 2 points higher than its final November print.

A 9-month high on the services PMI indicated the first increase in business activity in four months although growth remained marginal. Both new business and backlogs edged higher and the rate of job losses moderated. At the same time, business expectations improved but remained subdued compared with their long-run trend.

Input costs rose at their fastest pace in four months but the increase was nonetheless only marginal. Indeed, prices charged by service providers decreased again and more sharply than in November.

The upward revision to the service sector PMI is good news but the overall private sector economy still shrank at year-end if the composite output index is anything to go by. Essentially, French economic activity appears to be flatlining and demand clearly remains too weak to initiate any upward pressure on CPI inflation. The revisions will not impact speculation about another ECB ease this quarter.

Definition
The Composite PMI is produced by Markit and is based on original survey data collected from a representative panel of over 700 companies based in the French private sector economy. The final France Composite PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75 percent of total PMI survey responses each month.

The Services PMI is produced by Markit and is based on original survey data collected from a representative panel of over 300 companies based in the French service sector. The final France Services PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75 percent of total PMI survey responses each month.


Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.