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FR: PMI Manufacturing Final
| Consensus | Consensus Range | Actual | Previous | |
| Index | 49.9 | 49.9 to 49.9 | 50.1 | 51.2 |
Highlights
Growth in the manufacturing sector slowed in February to 50.1, marginally above the level marking expansion, from January when it reached a 43-month high of 51.2. Today's final figure is above the preliminary result of 49.9 which was also the consensus of an Econoday survey of economists' forecasts.
Manufacturers increased production, but in the absence of meaningful new orders, inventories piled up as a result of unfavorable economic conditions. As in previous months, businesses were optimistic and reporting robust sales in the pipeline amid forecasts for increased demand.
Furthermore, respondents are reporting overseas markets are acting as an anchor to production, with new orders from abroad declining at the fastest rate in six months.
Reports also emerged that inflation is hitting production costs, with those for metals and metal products on the rise, leading to the highest price increases since in roughly 18 months.
While slowing in February, two back-to-back months of expansion is a welcome sign. To be sure, sluggish order intake and inventory buildup is a concern and will be increasingly so in coming months if current optimism for improvement turns out to be illusory.
Market Consensus Before Announcement
The consensus sees no revision in the final for February from the flash at 49.9 and versus 51.2 in January final.
Definition
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 S&P Global.
Description
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 S&P Global 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 S&P Global 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.