Why the Markit PMI Report Is a Key Scorecard for Economies
Global Manufacturing at the Dawn of 4Q15: Tepid PMIs around the World
A gauge of business conditions
The Markit PMI (Purchasing Managers’ Index) reports are helpful when it comes to understanding business conditions in any economy. For example, investors in the European Union economy (VGK) can use this tool to assess whether the monetary stimulus from the European Central Bank is helping industrial activity pick up.
Global industrials sector exposure
The iShares Global Industrials ETF (EXI) tracks the performance of the industrials sector of global equity markets. The ETF seeks to replicate the performance of the S&P Global Industrials Index and is majorly invested in companies such as General Electric (GE), 3M (MMM), and United Technologies Corporation (UTX). These companies also dominate the US industrials sector. So investors in these companies are usually interested in the Markit US Manufacturing PMI monthly reading, which can help them track any rise or fall in the economy’s industrial activity that could substantially affect their investments in the US industrial sector (XLI).
The crucial industrial sector
The industrial sector serves as any economy’s growth engine, providing employment, infrastructure, producer goods, consumer goods, and export competitiveness. Industrial sector reports also affect broad-market investors such as those invested in the SPDR S&P 500 ETF (SPY) (SPXS) and the iShares Core S&P 500 ETF (IVV).
The Markit PMI Report
The Markit PMI Report serves as a business activity scorecard for an economy. This monthly economic survey provides insight into the private-sector economy by tracking variables such as output, new orders, employment, and prices across key sectors. Many policymakers use this data while making interest rate decisions that affect the economy at large.
On October 1, 2015, Markit released its September Global Manufacturing PMI report, which helps assess growth and trends in world manufacturing. We’ll take a deeper look at these trends in subsequent parts of this series.
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