FR: PMI Manufacturing Index

Fri Dec 01 02:50:00 CST 2017

Consensus Actual Previous
Level 57.5 57.7 56.1

The final sector PMI for November weighed in at 57.7, up 0.2 points versus its flash estimate, a tidy 1.6 points above its final October reading and a 7-year peak.

As previously indicated, November's buoyancy reflected faster growth of both manufacturing output (highest since April 2011) and new business (best since end-2010). Backlogs were also up again and that despite the second largest increase in employment in some seventeen years. Not surprisingly, business confidence in the year ahead remained elevated.

Inflation developments were also mildly positive with an eighteenth consecutive rise in input costs prompting a (modest) hike in factory gate prices.

November was a good month for French manufacturing. Unless there is a surprise setback in December, the fourth quarter PMI should see its strongest print in seventeen years. Manufacturing should make a decent contribution to overall 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.