US: PMI Manufacturing Index

Thu Mar 01 08:45:00 CST 2018

Consensus Consensus Range Actual Previous
Level 55.7 55.4 to 55.9 55.3 55.5

Growth eased very slightly over the last two weeks of the PMI manufacturing sample with the final February reading at 55.3 vs 55.9 for the mid-month flash and compared with January's 55.5. Despite the month-end slowing, the month's results are among the best of the last three years.

New orders, the most important of any reading, lead the strength with a 13-month high while production and employment held solid and business confidence, though still below the long-term average, improved.

Prices are a key signal of strength in today's report with input costs running at a 5-year high and selling prices at a 4-year high. Another sign of capacity stress is delivery times with delays at a 3-year high.

These results point to a strong first-quarter start for the factory sector though the directional signal does contrast with definitive data on the sector which opened the year on a weak note, specifically declines in January durable goods orders and no change for manufacturing in January's industrial production report.

Market Consensus Before Announcement
The PMI manufacturing index is expected to come in at a final of 55.7 in February which would compare with 55.5 in January. This report has generally been running cooler than the ISM manufacturing index.

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.