Markit Composite PMI

What is Markit Composite PMI?

The Markit Composite PMI is the legacy name of the eurozone composite gauge. It is the same survey compiled by S&P Global and sponsored by Hamburg Commercial Bank (HCOB). It rests on a monthly survey of about 5000 private firms in manufacturing and services. Each survey asks for the direction of change since the prior month, so it is a diffusion index of momentum, not of levels.

The headline blends 2 legs with Eurostat annual value-added weights. Manufacturing panels cover Germany, France, Italy, Spain, the Netherlands, Austria, Ireland and Greece, while services cover Germany, France, Italy, Spain and Ireland. Firms are grouped by sector and workforce size to mirror output shares in GDP. It does not measure GDP, sales or employment levels, and it covers only the euro area, not the whole European Union.

A reading above 50 means expansion since the prior month, while below 50 means contraction. Markets track it as an early signal ahead of official data, and the European Central Bank uses it in rate decisions.

When is it released and what happens each release?

Replies are collected in the second half of each month for the change since the prior month. A flash estimate appears during the reference month about a week before the finals, based on about 85-90% of replies. Final manufacturing follows around day 1 of the next month, with services and composite on business days 3-5 at 10:00 local time.

Survey answers are never revised after first publication, though seasonal adjustment factors can be revised, which restates the adjusted series. Each composite release adds country detail, international comparisons, index tables, method notes and survey dates. Markets track it among the first gauges of economic conditions published each month.

What moves Markit Composite PMI?

The headline blends only 2 legs, while demand, hiring, backlogs and prices color each release.

• Manufacturing Output Index: captures whether factory output is higher, unchanged or lower than the prior month.
• Services Business Activity Index: captures whether services activity volume is higher, unchanged or lower than the prior month.

Releases explain moves with off-formula drivers such as new orders, new export orders, expectations, employment, backlogs, input prices and output prices. Expectations above 50 point to growth over the next 12 months. The headline Manufacturing PMI instead uses 5 manufacturing variables in a different formula, so it is not directly comparable with the composite. The 50 line still splits expansion from contraction.

How is Markit Composite PMI calculated?

1. Diffusion index, a direction gauge: for each question and country, add the higher share plus half the unchanged share on a 0-100 scale. For example, 25% higher with 45% unchanged scores 47.5.
2. Seasonal adjustment, smoothing for calendar patterns: adjust each index before aggregation.
3. Country aggregation with output weights: combine country indices into eurozone manufacturing and services gauges with national value-added weights.
4. Composite Output Index: average the two eurozone gauges with eurozone weights. For example, 47.5 at weight 0.25 with 50 at weight 0.75 gives 49.4, a slight contraction.

Key point: the Composite Output Index is not comparable with the headline Manufacturing PMI, a different five-variable formula. The Services Activity Index is a single question on activity, not a five-part mix. Markit, IHS Markit, S&P Global and HCOB name the same survey programme, not rival gauges.