US: PMI Manufacturing Index

Thu Feb 01 08:45:00 CST 2018

Consensus Consensus Range Actual Previous
Level 55.5 54.2 to 55.5 55.5 55.1

PMI manufacturing came in at a final January reading of 55.5, near a 3-year high and unchanged from the mid-month flash and up 4 tenths from December.

New orders rose at their best rate in a year with export orders at a year-and-a-half high. Production is also at a year high and there are signs of capacity pressures including longer lead times, rising backlogs and higher selling prices. Confidence among the sample is described as "robust."

This report, in contrast to the ISM, was more subdued through last year making January's results an auspicious beginning for the 2018 factory sector. Watch for ISM manufacturing coming up at 10:00 a.m. ET this morning.

Market Consensus Before Announcement
PMI manufacturing posted a solid 5 tenths increase in the January flash to 55.5 for the best reading in nearly three years. Export sales were a highlight of the flash report as was production, employment and overall orders. The report's sample was trying to build inventories while traction for selling prices was the strongest in more than four years, both tangible signs of strength. The consensus for January's final PMI manufacturing is unchanged from the flash, at 55.5.

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.