FR: PMI Manufacturing Index

Mon Jul 03 02:50:00 CDT 2017

Consensus Actual Previous
Level 55.0 54.8 53.8

The flash sector PMI was revised 0.2 points weaker to 54.8 in the final report for June and so now stands 1 point above its final print in May.

As previously indicated, the acceleration in business activity largely reflected a sharper increase in new orders, notably from the construction sector. Backlogs also accumulated - and by the greatest extent in more than six years - despite another increase in payrolls. Output growth was solid but slightly down on May and this might have been impacted by increasing lead times for suppliers' deliveries. In any event, firms were very optimistic about the outlook with the confidence index climbing to a new high.

Input costs were up again but the inflation rate was the weakest since October 2016. Factory gate inflation similarly slowed.

Overall today's report is quite promising and if business sentiment is anything to go by, the third quarter should be another decent period for French economic growth.

The Manufacturing Purchasing Managers' Index (PMI) provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector survey incorporating around 400 companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The data are released by Markit.

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.