US: PMI Manufacturing Index

Fri Apr 01 08:45:00 CDT 2016

Consensus Consensus Range Actual Previous
Level 51.7 51.5 to 51.9 51.5 51.3

Growth in Markit Economics' U.S. manufacturing sample is marginal with the PMI coming in at 51.5 for the final reading on March. This is up only slightly from February's 51.0. A positive is strength in new orders which points to better rates of plus-50 growth in the months ahead. Employment is also up though the reading here contrasts with the big decline in this morning's payroll data on manufacturing. Production held unchanged while backlog orders shrank. The sample is destocking with prices, for both inputs and products, falling. A positive in the report is stabilization for export orders which appear to be getting an early boost from the fall in the dollar. Yet for now, the manufacturing sector is just dragging along, evident in durable goods data and also this morning's data on factory hours. The ISM is up next at 10:00 a.m. ET.

Market Consensus Before Announcement
The manufacturing PMI final is expected to edge 3 tenths higher from the flash reading to what would nevertheless be a weak 51.7. Unlike actual government data on the factory sector, this report never showed contraction last year though it has been slowing so far this year. Declines for energy equipment and for exports have been specifically cited as major negatives in this report. The pace of production is at multi-year lows and selling prices posted one of their rare drops in the flash report.

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.

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.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.