FR: PMI Manufacturing Index

Thu Nov 02 03:50:00 CDT 2017

Consensus Actual Previous
Level 56.7 56.1 56.1

The final manufacturing PMI for October weighed in at 56.1, a 0.6 point reduction versus its flash estimate and matching its final reading in September. It was also the joint highest outturn since April 2011.

As previously indicated, growth of business activity was again driven by new orders and this helped to ensure sustained solid gains in production. Net job creation was positive for a twelfth consecutive month but still not rapid enough to prevent a continued accumulation of backlogs which climbed at the steepest rate since December 2010. Not surprisingly therefore, businesses remained optimistic about the outlook for the year ahead.

Meantime, inflationary pressures intensified with the rate of increase in both input costs and factory gate prices accelerating.

Despite the negative headline revision, French manufacturing looks to have begun the fourth quarter in decent shape and the sector should make a useful contribution to the period's real GDP growth.

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.