FR: PMI Composite

Tue Dec 05 02:50:00 CST 2017

Consensus Actual Previous
Composite - Level 60.1 60.3 57.4
Services - Level 60.2 60.4 57.3

The final November PMI showed a slightly larger rise in overall business activity. At 60.3, the key composite output index was up 0.2 points versus its flash reading and nearly 3 full points above its final October print. It was also a new six-and-a-half-year high.

The positive revision in part reflected a stronger service sector where the flash PMI was revised 0.2 points firmer to 60.4, a 3.1 point increase from its final October level.

As previously indicated, the buoyant headline was built upon robust aggregate new orders which saw their largest advance since May 2011. Backlogs also continued to accumulate at a rapid pace and that despite the sharpest net addition to headcount in more than sixteen years. Business confidence rose from October's 9-month low and remained optimistic overall despite a marginal softening amongst manufacturers.

Price developments were quite firm and with input cost inflation climbing to a multi-year high, output prices posted a third consecutive advance.

Assuming that the survey results are confirmed in the hard data, the French economy will have had a very good November and quarterly GDP growth should be on course to match the 0.5 percent rate posted in July-September.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided 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 purchasing managers' manufacturing indexes, 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.