CN: PMI Flash Mfg Index

Mon Jun 22 20:45:00 CDT 2015

Consensus Actual Previous
Level 49.4 49.6 49.1

The June flash manufacturing PMI reading remained below the 50 breakeven point at 49.6. However, the output index climbed to a reading of 50 from 49.3. The data were mixed. On the one hand, the sector shows signs of improvement as output stabilized amid a slight pickup in total new work, while purchasing activity also rose slightly over the month. On the other hand, manufacturers continued to cut their staff numbers, with the latest reduction the sharpest in over six years. This suggests that companies have relatively muted growth expectations as demand conditions both at home and abroad remain relatively subdued.

New orders increased after decreasing but new export orders decreased but at a slower pace. Employment declined at a faster rate at did output prices. Input prices however, decreased at a slower rate. The data add to evidence that the sector has lost growth momentum in second quarter as a whole, and suggests that the authorities may step up their efforts to stimulate growth and job creation in the second half of the year."

The flash 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 estimate is released about 10 days prior to the final PMI, which is posted usually on the first of the 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 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.

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. The flash estimate gives investors an advanced look at what to expect on the first of the month.