EMU: PMI Composite


Wed Jun 03 03:00:00 CDT 2015

Consensus Actual Previous
Composite - Level 53.4 53.6 53.9
Services - Level 53.3 53.8 54.1

Highlights
The Eurozone economy expanded slightly more quickly than indicated in the flash data according to the final PMI report for May. At 53.6, the key composite output index was nudged a couple of ticks higher but was still 0.3 points short of its final April level.

The positive revision was largely attributable to a stronger service sector where the final PMI weighed in at 53.8, a 0.5 point gain versus its flash mark but also 0.3 points down compared with its final reading at the start of the quarter.

The slowdown in services reflected weaker growth of new orders and the first decline in backlogs so far in 2015. Employment was up for a seventh successive month and at its fastest pace in four-and-a-half years but business optimism still slipped to a 5-month low.

Input costs rose at the strongest rate since December 2012 but, more importantly, service provider charges declined for a remarkable forty-second consecutive month.

In terms of composite output indices amongst the big four countries, Spain (58.3) was best performer ahead of Italy (53.7). Germany (52.6) disappointingly posted a 5-month low but France (52.0), despite coming bottom of the pack, saw its fastest growth in three months.

Overall, today's results suggest no pick-up in Eurozone economic momentum this quarter. Moreover, although HICP inflation is now back in positive territory, pipeline pressures clearly remain very weak. Today's ECB meeting should be quite upbeat about the state of the Eurozone economy but business surveys continue to highlight downside risk.

Definition
The Eurozone Composite PMI is produced by Markit and is based on original survey data collected from a representative panel of around 5,000 manufacturing and services firms. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece. National services data are included for Germany, France, Italy, Spain and the Republic of Ireland.

The Eurozone Services PMI (Purchasing Managers' Index) is produced by Markit and is based on original survey data collected from a representative panel of around 2,000 private service sector firms. National data are included for Germany, France, Italy, Spain and the Republic of Ireland. These countries together account for an estimated 80% of Eurozone private sector services output.


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.