FR: PMI Manufacturing Index

Fri Sep 01 02:50:00 CDT 2017

Consensus Actual Previous
Level 55.8 55.8 54.9

The final manufacturing PMI for August weighed in at 55.8, unrevised from its flash reading and up almost a full point versus its final July print. It was also its highest mark some seventy-six months.

As previously indicated, output was particularly robust, registering its best performance since April 2011, and there were further healthy gains in both new orders (80-month high) and employment. Backlogs were also up sharply and business confidence in the year ahead remained robust, albeit slightly below its July mark.

Input costs continued to rise as did factory gate prices but the increase in the latter was less prominent than at the start of the quarter.

Overall, the final August results would seem to confirm a decent month for August itself and, with orders very firm, the third quarter as a whole would seem to be shaping up nicely for business activity.

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.