Manufacturing PMI

The HCOB Eurozone Manufacturing PMI (Purchasing Managers' Index) is compiled by S&P Global and sponsored by Hamburg Commercial Bank. It is a monthly factory survey covering about 3000 manufacturing firms in 8 eurozone countries, equal to about 89% of eurozone factory activity. Panels are split by industry sector and firm size using each country's output share. It measures only manufacturing in the euro area, not services, United States factories or official output volumes.

Responses are collected in the second half of the reference month and report change from the prior month. A flash estimate comes about a week before the final on about 85% to 90% of replies. The final comes on the first working day of the next month at 10:00 CET with full 8-country detail.

Each release publishes an output index, 5 subindices and other variables with a country table and economist comment. Survey answers are never revised, while seasonal factors can be revised. Central banks use 50.0 as the growth divide for rate decisions.

5 weighted parts drive the headline, with demand and output carrying over half the weight.

• New Orders, 30%: fresh demand inflow from customers.
• Output, 25%: factory production volumes during the month.
• Employment, 20%: staffing levels at manufacturing firms.
• Suppliers' Delivery Times, 15%: vendor delivery speed, inverted so longer delays lower the part.
• Stocks of Purchases, 10%: inventories of bought materials.

Delivery times above 50.0 mean faster delivery from weak demand, so a high reading signals slack, not strength. Country results can diverge inside one headline.

1. Diffusion index (share gauge): For each variable in each country, take the share reporting higher plus half the share reporting no change. For example, 20% higher and 50% unchanged gives 45.0 on a 0 to 100 scale.
2. Seasonal adjustment (calendar correction): Each index is seasonally adjusted to remove normal calendar patterns.
3. Country weighting: Country indices combine into eurozone scores using national manufacturing value added from Eurostat.
4. Headline average: The headline averages the 5 eurozone parts with fixed weights. It is 0.30 x New Orders plus 0.25 x Output plus 0.20 x Employment. The rest is 0.15 x inverted Delivery Times plus 0.10 x Stocks.
5. Worked example: For example, parts of 45.0 for orders, 47.5 for output, 45.0 for jobs, 27.5 for inverted delivery and 45.0 for stocks give 43.0. That 43.0 sits below 50.0 and means broad manufacturing contraction from the prior month. 50.0 means no change from the prior month, above means growth and below means contraction.