US: PMI Manufacturing Index

Fri Jun 01 08:45:00 CDT 2018

Consensus Consensus Range Actual Previous
Level 56.6 56.6 to 57.0 56.4 56.5

Strength with stress is the universal story of the small-sample surveys including PMI manufacturing where the index ends May steady at 56.4. Gains in orders lead the report and include the fastest build for backlog orders in 2-1/2 years. Shipping delays are the longest on record while input costs are climbing and leading to what the report describes as a "marked rise" in selling prices. The gains are notable in this report which has generally lagged the strength of similar reports including ISM manufacturing which is up next at 10:00 a.m. ET this morning.

Market Consensus Before Announcement
The PMI manufacturing index is expected to come in at a final of 56.6 in May, unchanged from the mid-month flash. Orders have been running at multi-year highs and, in a sign of capacity stress, delivery times have been lengthening sharply.

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.