US: PMI Manufacturing Index

Wed Nov 01 08:45:00 CDT 2017

Consensus Consensus Range Actual Previous
Level 54.5 53.4 to 54.5 54.6 53.1

The manufacturing PMI had been lagging other private and regional data but is now signaling solid and accelerating growth for the sector. The index rose to 54.6 for the final October reading for its best showing since early in the year. This compares with 54.5 for the October flash and 53.1 in September. New orders are on the rise especially export orders which posted their best monthly advance since August last year. And employment is also very strong with its best showing since June 2015. Production is up, inventories are up, costs remain elevated, and selling prices are showing traction. Hurricane effects haven't yet passed and are still working through the supply chain with delivery times still slowing. The past two durable goods reports out of Washington have been very strong and gains among the softer data, like today's report, hint perhaps at substantial acceleration for the factory sector going into year end. Watch later this morning at 10:00 a.m. for the ISM manufacturing report.

Market Consensus Before Announcement
PMI manufacturing accelerated sharply in October's flash, up 1.5 points to a solid 54.5 and an 8-month high. New orders and employment were highlights while delivery delays, tied to Hurricanes Harvey and Irma, gave perhaps a one-time boost to the composite index. Forecasters see no change for final October with the consensus at 54.5.

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.