InvestorQ : What does the fall in PMI Manufacturing number actually indicate for November 2020?
Mitali Bhutta made post

What does the fall in PMI Manufacturing number actually indicate for November 2020?

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6 months ago
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PMI or the Purchase Manager Index for Manufacturing was still hinting at economic expansion in manufacturing sector but the tempo surely slowed in the month of November compared to October 2020.

After core sector contraction widened from -0.1% on September to -2.5% for October, the November PMI-Manufacturing also saw loss of momentum falling to a 3-month low of 56.3. It had touched a multi-year high of 58.9 in October.

Just for records, the PMI above-50 shows that manufacturing is still expanding but the momentum is slackening as the number is lower on a YOY basis. Unlike other macro trends that are normally YOY, PMI is a sequential indicator making it more of a high frequency data point, which makes it a very critical point to study shifts.

Among the key triggers for PMI, there was strong growth in new orders and in output during the month of November 2020. However, the pandemic related restrictions caused a further drop in payroll numbers, which is not a very good signal for the sustenance of the trend.

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