DE: PMI Manufacturing Index

Fri Dec 01 02:55:00 CST 2017

Consensus Actual Previous
Level 62.5 62.5 60.6

The flash PMI was unrevised in the final November report. This left a near-2 point rise versus its final November outturn and the second highest reading on record.

Production saw its steepest gain since April 2011 and new business its sharpest advance since March 2010. Both domestic and overseas demand picked up momentum and prompted a net addition to headcount that was only beaten once (March 2010) in the survey's history. Even so, backlogs were up again and at one of the fastest rates since late 2002. Business confidence actually declined to an 11-month low but was still elevated by historic standards.

Meantime, input cost inflation climbed to its strongest level while factory gate prices clocked their sharpest increase since June 2011.

The unrevised November PMI figures leave intact a very optimistic picture of German manufacturing. Strong growth of new orders and a reassuringly broad-based upswing across the sector bode well for more of the same to come.

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.