FR: PMI Composite


Wed Jan 06 02:50:00 CST 2016

Consensus Actual Previous
Composite - Level 50.3 50.1 51.0
Services - Level 50.0 49.8 51.0

Highlights
French services slightly underperformed original estimates in December. At 49.8, the final sector PMI was 0.2 points short of its provisional reading, 1.2 points below its final November outturn and at an 11-month low. As a result, the key composite output index was also revised 0.2 points softer to 50.1, an 11-month trough.

December's contraction in services activity was the first in almost a year and reflected near stagnation in new business and essentially flat backlogs. Employment was also unchanged on the month and business expectations dipped to their lowest level in fourteen months.

Input costs continued to rise but the rate of inflation remained moderate. Indeed, output prices fell again and at the fastest rate in half a year. Strong competition and restricted client budgets continue to keep a lid on charges.

The December PMIs raise a further question mark over the magnitude and durability of the French economic recovery. With only limited evidence of any negative impact from November's terrorist attacks in Paris the indications are that underlying growth remains worryingly sluggish and certainly too slow to accommodate any upward pressure on prices. The first half of 2016 is likely to be a very difficult period for the French economy.

Definition
The Composite PMI is produced by Markit and is based on original survey data collected from a representative panel of over 700 companies based in the French private sector economy. The final France Composite PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75 percent of total PMI survey responses each month.

The Services PMI is produced by Markit and is based on original survey data collected from a representative panel of over 300 companies based in the French service sector. The final France Services PMI follows on from the flash estimate which is released a week earlier and is typically based on at least 75 percent of total PMI survey responses each month.


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.