HCOB Manufacturing PMI

What it is

The HCOB Eurozone Manufacturing PMI, compiled by S&P Global, combines national surveys of manufacturing purchasing managers, including Germany, France, Italy and Spain, into a single euro-area diffusion index. The headline is built from new orders, output, employment, suppliers' delivery times and stocks of purchases, and input and output price indices are published alongside it. A flash estimate is released late in the reference month, and this final reading follows on the first business day of the next month.

Why it matters to traders

A reading above 50 signals that euro-area factory activity is expanding, and a reading below 50 signals contraction. Germany is the largest contributor to euro-area manufacturing, so the German and euro-area readings tend to be watched together as a read on the bloc's industrial cycle. Because this final print revises a flash estimate published roughly a week earlier, markets usually react to the size and direction of that revision, and to the gap against the consensus forecast, more than to the level itself. A clear surprise can move the euro and shift expectations for European Central Bank policy.

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