FR: PMI Manufacturing Index

Tue Dec 01 02:50:00 CST 2015

Consensus Actual Previous
Level 50.8 50.6 50.6

The flash PMI estimate for November was revised down a couple of ticks to 50.6 in the final data, its third consecutive reading at this level.

As previously indicated, production growth slowed and was the weakest in the last three months while new orders essentially flatlined as an increase in domestic demand was offset by the steepest fall in exports since April. Output had to be supported by another rundown in backlogs, this time the sharpest in half a year. Staffing levels continued to decline, extending the period of contraction to some twenty months albeit at only a marginal pace in November.

Input costs decreased for a third straight month and, more significantly, output prices continued to weaken as they have every month since March 2014. Moreover, the drop in factory gate charges was the most marked in six months.

If the PMI survey is anything to go by, French manufacturing had another generally disappointing period in November. Although there were no specific reports of any impact upon orders from the terrorist attacks in Paris, the chances are that there was at least some fallout. However, irrespective of this, underlying trends remain very sluggish.

The Purchasing Managers' Manufacturing Index (PMI) 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.

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 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.