EMU: PMI Composite


Wed Nov 04 03:00:00 CST 2015

Consensus Actual Previous
Composite - Level 54.0 53.9 53.6
Services - Level 54.2 54.1 53.7

Highlights
The Eurozone private sector economy performed much as originally reported in October. Hence, the final composite output index weighed at 53.9, just 0.1 points below its flash estimate and 0.3 points above its final September mark.

The minor negative revision reflected a similarly minimal 0.1 point dip in the service sector PMI to 54.1, just 0.4 points above its final September print. Compared with the previous month, the increase in the PMI was largely a function of stronger new business which increased at its fastest pace since July but backlogs and employment also registered decent gains. Input costs were up enough to see the fastest inflation rate in three months but remained well below the series' long-run average. More importantly, service provider charges, having risen for the first time in more than four years in September, resumed their downward trend.

Regionally, in terms of composite output indices the best performer was Ireland (57.7) ahead of Spain (55.0) and Germany (54.2). Italy (53.9) also had a decent month but France (52.6) still lagged despite hitting a 4-month high.

The final October data still show Eurozone growth largely dependent upon a recovery in services and the lack of balance here will be a concern for policymakers. The quarterly growth rate looks to be around 0.4 percent which in itself is inadequate, but more of a worry will be another decline in output prices. This will be seen in financial markets as instrumental in an increasingly widely expected fresh wave of easing from the ECB in December.

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.