European Monetary Union: Flash PMI

Emerging Markets: Flash PMI

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EMU: Purchasing Manger’s Index

This week the Flash PMI for the EMU will be released.  The flash Composite Purchasing Managers’ Index (PMI) provides an early estimate of current private sector output.

The flash data are released around ten days ahead of the final report and are typically based upon 75-85 percent of the survey sample. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting).

The report contains flash estimates of the manufacturing and services PMIs. The survey is produced by IHS Markit and uses a sample of around 5,000 manufacturing & services firms.

Manufacturing firms located in:

  1. Germany
  2. France
  3. Italy
  4. Spain
  5. Netherlands
  6. Austria
  7. Ireland
  8. Greece.

Services firms located in:

  1. Germany
  2. France
  3. Italy
  4. Spain
  5. Ireland.

The report is significant because other investors/traders value it –economic data such as the PMIs  indicate what the economic backdrop is for the various markets:

  • Equity investors like to see rapid economic growth because that usually translates to higher corporate profits.  However, increased corporate profits may occur without any growth whatsoever.
  • Forex traders like rapid growth as well because that is one indicator of demand for a country’s currency.
  • The fixed income (bond) market prefers slow to no growth and is extremely sensitive to whether the economy is growing too quickly due to inflationary pressure.

So which market do you think the central pirates banks cater to?

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Author: Alexander Zhang's Blog

The ocean is my home, although I don't miss living on a ship! Risk Manager & Author from San Francisco.