US: PMI Manufacturing Index

Tue Jan 02 08:45:00 CST 2018

Consensus Consensus Range Actual Previous
Level 55.0 55.0 to 55.5 55.1 53.9

The December final for Markit's U.S. manufacturing report is little changed from December's flash, up 1 tenth to 55.1 but up a sizable 1.2 points from November. Acceleration in new orders and a 2-year best for backlogs highlight December's results which also include stronger production growth and a 3-year high for employment. Input costs rose on supply chain delays while selling prices, though still rising, did slow. Business confidence in this report is described as robust. One negative is only marginal growth for export sales.

This report showed much less strength last year than ISM manufacturing which perhaps heightens the importance of the strength in today's results. The jury is still out but the factory sector appears to have accelerated noticeably going into year end. Watch tomorrow for ISM's December report.

Market Consensus Before Announcement
PMI manufacturing rose a sharp 1.2 points in the December flash to 55.0. The flash showed increases for new orders, production and especially employment where growth in this sample was the best since September 2014. Forecasters see no change for final December with the consensus at 55.0.

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.