US: PMI Manufacturing Index

Fri Dec 01 08:45:00 CST 2017

Consensus Consensus Range Actual Previous
Level 54.5 53.8 to 54.9 53.9 54.6

Markit's U.S. manufacturing sample reported a slightly slower rate of growth in November with the PMI ending the month at 53.9, down 1 tenth from the mid-month flash and down 7 tenths from October's 54.6 which was a 9-month high.

Despite the slowing and despite the moderate level, details are positive led by a solid showing for new orders, where foreign demand is keeping up with domestic demand, and including a fourth straight build in backlogs. Production slowed but employment was strong in the month and capacity pressures, as in other diffusion reports, are apparent with delivery delays a problem and input costs on a steep rise.

The higher costs are increasingly being passed through to higher selling prices which is likely one factor behind the confidence in the sample which is at its highest since January last year. This report points to steady strength for a factory sector that appears poised to post strong fourth-quarter numbers.

Market Consensus Before Announcement
PMI manufacturing slowed slightly in November's flash to 53.8 but details remained very strong with new orders and backlogs on the rise. Business optimism was also a major plus showing the most strength since early last year. Price pressures were also prominent. Forecasters see a step up for final November 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.