HCOB Manufacturing PMI

What is HCOB Eurozone Manufacturing PMI?

The HCOB Eurozone Manufacturing PMI (Purchasing Managers' Index, a survey-based health gauge) tracks euro-area factory conditions each month. It is compiled by S&P Global from manufacturer questionnaires, while HCOB (Hamburg Commercial Bank in Hamburg, Germany) only sponsors the series and comments on results. HCOB became naming sponsor in April 2023; the same survey previously carried the S&P Global name alone.

It covers around 3000 manufacturers in 8 countries, equal to 89% of eurozone manufacturing activity. The series runs monthly since June 1997.

Replies record direction of change from the previous month, not output levels. Readings above 50.0 signal broad expansion and below 50.0 signal contraction. It covers manufacturing only, not services, and it is not an official Eurostat output statistic.

Arabic financial media render its name as the HCOB Flash Eurozone Manufacturing PMI or as the Eurozone PMI issued by Hamburg Commercial Bank. It must not be confused with the United States ISM Manufacturing PMI, the flash estimate, the Output Index alone, or the Eurozone Composite PMI.

When is it released and what happens each release?

Survey responses are collected in the second half of each month. The final release for a reference month appears on the first working day of the next month, embargoed until 1000 CET (0900 UTC). A flash (advance) estimate from 85% to 90% of replies comes about a week earlier.

Each release publishes the Output Index and a country ranking table for all 8 nations. It also publishes gauges for orders, exports, backlogs, stocks, purchases, jobs, delivery times, prices and future output.

It adds written commentary from the HCOB chief economist plus charts. Underlying replies are never revised after publication, though seasonal factors may be revised. Markets read it as a monthly measure of the overall health of eurozone factories.

What moves HCOB Eurozone Manufacturing PMI?

The headline is a weighted average of five seasonally adjusted demand, output and jobs gauges.

• New Orders, 30%: whether incoming new business rose, held steady or fell.

• Output, 25%: direction of factory production volumes, also shown as the Output Index.

• Employment, 20%: direction of manufacturing staffing levels.

• Suppliers Delivery Times, 15%: speed of vendor deliveries, inverted so slower delivery reads higher.

• Stocks of Purchases, 10%: direction of input inventory levels.

In November 2023 the headline rose to 44.2 from 43.1 in October 2023, a 6-month high, yet stayed below 50.0 for a seventeenth straight month. The Output Index rose to 44.6 from 43.1 as declines in orders, purchasing and stocks only eased. Factory job cuts ran for a sixth month at the fastest rate since August 2020.

Suppliers delivery times shortened for a tenth month on weak demand, while input costs and factory-gate prices kept falling. Contraction covered 6 of the 8 nations; Austria ranked weakest, followed by Germany and France, while only Greece at 50.9 and Ireland at 50.0 escaped. The lesson: a rising headline below 50.0 means slower deterioration, not recovery, and jobs can fall faster while it rises.

How is HCOB Eurozone Manufacturing PMI calculated?

1. Diffusion index: for each variable, add the share reporting higher to half the share unchanged. A 30% higher plus 50% unchanged mix gives 55.0, or expansion. Every index runs from 0 to 100.

1. Seasonal adjustment: adjust each country index for regular calendar effects before combining them.

1. Eurozone aggregation: weight country indices by national manufacturing annual value added from Eurostat.

1. Headline PMI: average the five eurozone gauges as 30% orders plus 25% output plus 20% jobs plus 15% inverted delivery times plus 10% stocks. For illustration, 48.0, 47.0, 46.0, 52.0 and 45.0 give 47.7, or contraction.

1. Flash estimate: repeat the same steps on 85% to 90% of replies about a week early.

Key point: the PMI measures breadth of direction, not euros or tonnes, and headline PMI does not equal factory output or the composite gauge.