CN: CFLP Manufacturing PMI

Sat Oct 31 20:00:00 CDT 2015

Consensus Actual Previous
CFLP Mfg PMI 50 49.8 49.8

October CFLP manufacturing PMI reading was below the 50 breakeven point between contraction and expansion, albeit just slightly below. The reading was 49.8, virtually the same as September's 49.7 indicating that manufacturing continues to contract. Both production and new orders were virtually unchanged from September with readings of 52.2 and 50.3 respectively. New export orders weakened, contracting to 47.4 from 47.9. Finished goods inventories, imports, input prices, raw materials inventories and employment continued to contract. Business expectations eased to 52.5 from 53.9 last month.

A survey of about 800 purchasing managers about the health of the manufacturing sector. The numeric result is a diffusion index. A reading above 50 indicates that manufacturing is growing. A reading below 50 indicates contraction.

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 CLFP 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 survey tends to have a greater impact when it is released prior to the HSBC/Markit manufacturing PMI because the two reports are correlated.