US: PMI Manufacturing Index

Mon Feb 02 08:45:00 CST 2015

Consensus Consensus Range Actual Previous
Level 54.0 53.7 to 54.1 53.9 53.9

Steady and sustainable growth continues to be the indication from Markit's US manufacturing sample where the composite index finishes January at 53.9 vs 53.7 at mid-month. December's readings were the same: 53.9 for final December and 53.7 at mid-month.

On the strong side are output volumes and employment, the latter is a special plus, while on the soft side is new business growth which is being held down by weakness in export orders. Here, the strong dollar and slowing foreign markets are a concern.

Weakness in the price-depressed oil & gas sector is also a factor holding down new business. Price pressures, because of oil, are very soft.

This report slowed into year end, in contrast to the ISM whose manufacturing sample reported mostly strong and sometimes robust rates of growth. The ISM report for January is coming up next at 10:00 a.m. ET.

Market Consensus Before Announcement
The Markit PMI manufacturing flash index came in at 53.7 in January from 53.8 in final December and a flash reading in December of 53.7. This index has been slowing to the softest readings in a year because of weakening oil & gas activity and weakening export orders. Lower oil prices, however, have been a plus for input cost pressure which declined in the January flash for the first time in two-and-a-half years. Early indications on manufacturing activity in January have been soft.

Purchasing Managers' Manufacturing Index (PMIs) is based on monthly questionnaire surveys of selected companies which provide an advance indication of what is really happening in the private sector economy.

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 ISM manufacturing index in the U.S. and the Markit PMIs in the U.S. and elsewhere, 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.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.