US: PMI Manufacturing Index

Mon Jun 01 08:45:00 CDT 2015

Consensus Consensus Range Actual Previous
Level 53.8 53.5 to 54.3 54.0 54.1

Weak exports remain the unfortunate theme of U.S. manufacturing data, holding down new orders and holding down Markit's PMI to 54.0. Growth in new orders is the weakest in 16 months with exports, hit by strength in the dollar, in outright contraction for a second month. Orders from the energy sector are also weak.

Employment is this report continues to run at a much stronger pace than actual manufacturing employment which is flat. Given the slowing in orders, slowing in employment for this sample is just a question of time. Production growth is the weakest of the year and backlog orders posted their slowest rise in four months. Price readings are mixed with inputs rising for the first time in four months but outputs up only slightly from last month's 11-month low.

There's plenty of signs of weakness but this report is still running much hotter than any all other manufacturing report. Watch for the ISM report coming up at 10:00 a.m. ET where the Econoday consensus is calling for a very sluggish 51.8.

Market Consensus Before Announcement
The PMI manufacturing index has been struggling, falling back in recent months consistent with other readings on the sector. Employment has been a special strength of this report but gains here have not been justified by orders which have been slowing.

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.