FR: PMI Manufacturing Index

Tue Aug 01 02:50:00 CDT 2017

Consensus Actual Previous
Level 55.4 54.9 54.8

French manufacturing activity was somewhat softer than originally thought in July. The flash sector PMI was revised down 0.5 points to 54.9 and so now stands just 0.1 points above its final June print. That said, the latest reading was still only just shy of April's peak.

As previously indicated, growth was underpinned by another solid increase in new orders reflecting rising demand in both the domestic and overseas markets alike. Output recorded another marked advance and employment expanded at its fastest pace in almost seventeen years. Even so, backlogs continued to accumulate.

Input cost inflation was again significant but softened to a 9-month low. By contrast, average selling prices rose more quickly than in June.

Despite the negative headline revision, French manufacturing looks to have begun the third quarter on a decent footing. Sustained increases in new orders and employment bode well and business confidence about the year ahead is at a record high. Near-term, real GDP growth looks set to hold up well.

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.