FR: PMI Manufacturing Index

Mon Oct 02 02:50:00 CDT 2017

Consensus Actual Previous
Level 56.0 56.1 55.8

The final sector PMI weighed in at 56.1, up just a tick versus its flash estimate but indicative of the sharpest improvement in manufacturing business conditions since April 2011.

As previously signalled, output growth was close to a six-and-a-half year high and the sector also recorded particularly marked rises in new orders from both the domestic and overseas markets. Combined with another sizeable advance in backlogs, this saw employment expand at a rate that was only just short of July's near-17-year peak. Not surprisingly, business sentiment was more optimistic than in August.

Meantime, input price inflation picked up on the back of higher raw material prices but, while also increasing, selling prices did so at a slower pace than in August.

Nonetheless, the overall tone of the September survey is upbeat and should be reflected in increased sector momentum through year-end.

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.