DE: PMI Manufacturing Index

Thu Nov 02 03:55:00 CDT 2017

Consensus Actual Previous
Level 60.5 60.6 60.6

The flash October PMI was all but unrevised at 60.6. This matched its final September mark and suggests that growth of business activity equalled its fastest rate in some seventy-seven months.

Although rises in both new orders and output were slightly down on September, the overall picture remained extremely positive and strong enough to ensure the largest increase in employment in more than six years. Even so, backlogs were up again. Further evidence of increasing pressure on capacity was apparent in a fresh lengthening in delivery times and the incidents of delays were close to a record high. Manufacturers' expectations for the year ahead remained very positive albeit dipping to a 7-month low.

Inflation signals continued to move up. Input costs saw their sharpest gain since April and factory gate prices climbed at a rate that was only just short of September's 75-month peak.

October looks to have been another very good month for German manufacturing and should set the scene for what is likely to prove a buoyant fourth quarter.

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 500 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.