US: PMI Manufacturing Index

Mon Oct 02 08:45:00 CDT 2017

Consensus Consensus Range Actual Previous
Level 53.0 52.5 to 53.0 53.1 52.8

The PMI manufacturing report continues to report no more than moderate conditions, much more in line with trends in national data out of Washington than other private and regional reports that have been reporting extremely strong conditions. The PMI ends September at 53.1, little changed from 53.0 at mid-month and August's final score of 52.8. New orders eased from August though export sales did improve. Growth in production held at August's 14-month low. Backlog accumulation remains moderate.

Hurricane effects are hard to find in the data except for input costs which accelerated sharply to the fastest rate in nearly 5 years. These prices are being passed through to selling prices but only to a limited extent. Another hurricane effect may be delivery delays which slowed the most since February last year.

Clear pluses include a rise in employment and also the sample's general optimism which is described as "robust." ISM's September report is coming up at 10:00 a.m. ET and is one of the private reports that have been running unusually strong, at 58.8 in August.

Market Consensus Before Announcement
PMI manufacturing has been running at much more moderate rates of growth than any other private or regional survey, more in line with the actual pace of the nation's factory sector. New orders posted their slowest rate of growth of the year in September's flash with export orders stagnate. There were few indications of specific trouble tied to Hurricanes Harvey or Irma though input costs did hit a 5-year high. Forecasters see no change from September's 53.0 flash.

Based on monthly questionnaire surveys of selected companies, the Purchasing Managers' Manufacturing Index (PMI) offers an advance indication on month-to-month activity in the private sector economy by tracking changes in variables such as output, new orders, stock levels, employment and prices across manufacturing industries. The final index for the current month is released roughly a week after the flash.

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.