FR: PMI Composite FLASH

Fri Aug 21 02:00:00 CDT 2015

Consensus Actual Previous
Manufacturing - Level 49.8 48.6 49.6
Services - Level 52.1 51.8 52.0
Composite - Level 51.3 51.5

Private sector business activity was soft again in August but signaled it was still growing. With both the flash manufacturing and service sector PMIs undershooting expectations, the key composite output index reading was 51.3, down from July's reading of 51.5. However, the index remained above the 50 growth threshold but down 0.2 point from its final June reading.

The flash manufacturing reading dropped to 48.6 from 49.6 in June while services slipping to 51.8 from 52.0 the month before. Indeed the expansion remained centered on the service sector, where activity increased for a eighth consecutive month in August. However, the rate of expansion eased to the weakest since April.

New business received by French private sector firms rose for a ninth successive month in August. However, the rate of growth was marginal and the slowest in four months. Service providers signaled the weakest increase in new work since January, while manufacturers recorded the sharpest decline in new orders in four months. New export orders received by manufacturers rose for the first time in three months, albeit fractionally.

August data pointed to a reduction in employment at French private sector firms for the second month in succession. Although marginal, the rate of job shedding was the fastest since December 2014. Lower staffing levels were signaled across the manufacturing and service sectors.

Backlogs of work at French private sector companies increased for a ninth consecutive month but the rate of growth eased a pace that was the slowest since May. Service providers registered a modest expansion of unfinished work, whereas manufacturers signaled a reduction for the first time in three months.

Input prices faced by French private sector firms rose for a seventh successive month in August. However, the rate of cost inflation moderated to a four-month low and was modest overall. Service providers and manufacturers both indicated slower increases in costs during the latest survey period.

Business expectations in the French service sector improved in August, reaching the highest since March 2012. Anecdotal evidence suggested that new product releases and promising pipelines of work were expected to lead to higher activity over the next 12 months.

The PMI is produced by Markit Economics and is based on original survey data collected from a representative panel of 750 companies based in the French manufacturing and service sectors. The flash estimate is based on around 85 percent of total PMI survey responses each month and is designed to provide an accurate advance indication of the final PMI data.

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.