DE: PMI Composite

Tue Sep 05 02:55:00 CDT 2017

Consensus Actual Previous
Composite - Level 55.7 55.8 54.7
Services - Level 53.4 53.5 53.1

The final composite PMI weighed in at 55.8, just a tick stronger than its flash estimate and more than a full point above its final July mark. The final services PMI was 53.5, similarly 0.1 points firmer than its initial estimate and up 0.4 points from its final print at the start of the quarter, itself a 10-month low.

The lack of any significant revisions left intact a useful, if relatively restrained, improvement in services activity, led by faster growth of new business (but still the second weakest in 2017) and another sizeable net addition to headcount (but also a multi-month low). Backlogs actually declined marginally having expanded in both June and July but business expectations remained strong despite easing further from May's recent peak.

Input costs increased sharply and inflation here touched a 5-month high. Output price similarly recorded their largest advance since March.

The final PMI data suggest that real GDP growth this quarter should not fall far short of the 0.6 percent quarterly rate achieved in April-June. With manufacturing apparently in boom mode, the main restraining factor is services where activity rates are lagging significantly. This sector will need watching closely over coming months.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by Markit.

The Purchasing Managers Index (PMI) survey has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries (including the European Central Bank) use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.