FR: PMI Manufacturing Index

Thu Mar 01 02:50:00 CST 2018

Consensus Actual Previous
Level 56.1 55.9 58.4

The final PMI report confirmed the slowdown in manufacturing activity last month shown in the flash data. At 55.9, the final print was 0.2 points below its initial estimate and a sizeable 2.5 points short of its final January mark. It also was the weakest print since August last year.

As previously reported, growth of output, new orders and employment all fell short of their respective rates at the start of the year. However, all remained positive and at high enough levels to suggest that first quarter business activity expanded at a reasonably healthy clip. Indeed, business confidence in the year ahead climbed to a new record high.

Meantime, input cost inflation remained sharp amid reports of higher raw material costs, and firms sought to protect profit margins with a sixteenth successive rise in average charges.

The final February PMI report still suggests that French manufacturing will have a decent first quarter. However, early signs of a cooling in consumer activity warn that exports may have to make another sizeable contribution to keep output expanding at its current healthy rate.

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.