FR: PMI Composite

Wed Oct 04 02:50:00 CDT 2017

Consensus Actual Previous
Composite - Level 57.2 57.1 55.2
Services - Level 57.1 57.0 54.9

The final composite output index showed just a 0.1 point downward revision to its flash estimate. This left a still sizeable positive 2.1 point gap versus its final mark in August and at its highest level since May.

The minimal revision was attributable to services where the flash sector PMI was nudged a tick weaker to 57.0, a 0.3 point gain versus its final August outturn. As previously reported, the buoyancy here came courtesy of strength in new business which expanded at its fastest rate since May 2011 and another above average advance in backlogs. Job creation was also positive for a ninth consecutive month and not far short of June's multi-year peak.

Inflation moved up with input costs rising more steeply than at any time in the last five months and service provider charges were also higher than in August. That said, historically, both rates were still soft.

The final September PMI results would seem to confirm a strong end by the French economy to last quarter and at the same time suggest that growth should hold up well in the current quarter too. However, pipeline inflation pressures, while increasing, remain quite subdued.

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 750 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.

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 purchasing managers' manufacturing indexes, 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.