UBS Already Loves This Brand New US Economic Indicator

Lightning Danger Flash

Photo: Eddy Van 3000 via Flickr

In May, Markit introduced the world to the U.S. flash purchasing manufacturer’s index (PMI) number.The index is based on a survey companies.

The measure is similar to the ISM manufacturing index that we already get.

However, UBS economist Drew Matus thinks the new measure might actually be more useful than the old one.

From Matus:

The Markit flash PMI rose a ½ pt to 51.9 in Aug. Indexes of output, new orders, and supplier deliveries rose, while employment steadied and inventories fell.

We suspect the Markit index will prove to be a better indicator of manufacturing trends than the ISM because of its wider coverage of manufacturing firms. With only a short history, it has tended to correlate better with trends in output than the ISM; and, within the index, the output component has an even better record than the headline PMI. In Aug the output index rose 0.7 to 52.4.

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