|Level||52.8||52.3 to 53.3||51.3||52.6|
In yet another negative signal for the manufacturing sector, the manufacturing PMI fell to 51.3 for the lowest reading in more than three years. This compares with 52.8 in the final reading for November and against 52.6 in the November flash. New orders are very slow this month, showing the softest rate of monthly expansion in more than six years. And in an ominous indication, slowing here not only reflects weakness in export orders, which have been soft all year, but now also for domestic markets especially investment demand in the energy sector. This latter detail is also ominous as many had been hoping that energy spending, having hit deep lows, would begin to rebound. Also note that backlog orders are in contraction for a second month in the weakest monthly reading in three years.
Production increased only marginally in the month for the weakest rate in more than two years. Despite all the weakness, the sample's employment is up so far this month though further gains, given all the weakness, are definitely in doubt. Inventories of finished goods moved higher in the month but the build is likely unplanned, tied to weak production. Price data remain very quiet.
Yesterday's Empire State report also showed December weakness setting up for tomorrow's very closely watched Philly Fed report which, in a reminder of the new time slot, will be posted at 8:30 a.m. ET.
Market Consensus Before Announcement
The manufacturing PMI, which had been posting much stronger levels of activity than other manufacturing reports, slowed sharply in November with new orders showing their slowest pace in more than two years. Export orders have been in outright contraction, once again the result of weak foreign demand made weaker for U.S. goods by the strength of the dollar. Forecasters see the December flash holding steady at November's 52.8 level.
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 by tracking changes in variables such as output, new orders, stock levels, employment and prices across the manufacturing sectors. The flash index, usually released about a week before the final, gives a preliminary reading of conditions for the current month.
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. The flash index, usually released about a week before the final, gives a preliminary reading of conditions for the current month.
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.