US: PMI Manufacturing Index Flash


Tue Mar 24 08:45:00 CDT 2015

Consensus Consensus Range Actual Previous
Level 54.7 53.7 to 56.0 55.3 54.3

Highlights
The manufacturing sector has gotten off to slow start this year but may have picked up slightly in March, based at least on the PMI flash which is at 55.3, a 5-month high and vs 55.1 in final February and 54.3 in mid-month February. New orders are also at a 5-month high as rising domestic sales offset declining export sales and weak sales out of the oil sector. Output is at a 6-month high and employment at a 4-month high. Input costs are down for a 3rd straight month and output prices are rising at their slowest pace in 3-1/2 years.

The decline in export sales is of special note in this report which cites concerns among respondents that the dollar's strength against the euro is hurting demand. Last week's FOMC statement pointed to weak exports as a major factor holding down growth. This report in general has been running noticeably hotter than hard data from the government which have been no better than flat, if that, and which would correspond to a roughly 50 level for the PMI.

Market Consensus Before Announcement
The Markit PMI manufacturing index (final) in February rose to a final 55.1 from 54.3 at mid-month and 53.9 in final January. The 0.8 point gain from mid-month implies a roughly 56.0 level for the last two weeks of February. Strength in Markit's sample group was centered in output and new orders, both of which were rising at 4-month highs. Shipping delays, typically indicative of tie-ups tied to strong demand, were also a positive factor for the index, but in this case the delays were tied to snags not related to demand, that is the West Coast port slowdown and heavy weather on the East Coast.

Definition
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 by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors. The flash index, usually released about a week before the final, gives a preliminary reading of conditions for the current month.

Description
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. The flash index, usually released about a week before the final, gives a preliminary reading of conditions for the current month.

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.