US: PMI Manufacturing Index

Tue Sep 01 08:45:00 CDT 2015

Consensus Consensus Range Actual Previous
Level 53.0 52.7 to 54.0 53.0 53.8

Growth in Markit's manufacturing sample is as slow as it's been since October 2013, at a composite 53.0 in August which is right at the Econoday consensus. Growth in new orders slowed while growth in backlog orders was marginal. Export orders, hurt by the strong dollar, contracted for the fourth time in five months with August's drop the deepest of the run. Growth in output is the slowest since January 2014 while growth in employment is the slowest since July 2014.

Inventory data are positive, showing the first decline this year for finished goods and the slowest build for pre-production in just over a year, a combination which may ease concern that inventories in the sector are heavy. Price readings are quiet.

This report, along with the ISM index which will be released later this morning at 10:00 a.m. ET, failed to pick up the auto-led rebound for the factory sector in June and July, a fact that will limit their impact on August expectations.

Market Consensus Before Announcement
The manufacturing PMI is expected to slow to 53.0 in August from 53.8 in July. This report never picked up the auto-related surge for the factory sector during June and July. Among components, exports have been weak in this report but employment strong.

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.