PMI (Purchasing Managers’ Index)

The Purchasing Managers’ Index (PMI) is a widely used indicator for measuring the level of economic activity in different sectors, typically manufacturing and services. It is used to gauge the economic growth or contraction trends of a country.

PMI is compiled based on monthly surveys of purchasing managers. These surveys provide information on factors such as production, new orders, employment, supply chain, and inventory levels. The index is designed to capture the sentiment and activity levels of purchasing managers, who are responsible for making purchasing decisions within their organizations.

PMI is typically evaluated against a threshold value of 50. If the PMI is above 50, it is interpreted as a signal of growth across the sector. If the PMI is below 50, it indicates a contraction in the sector. A PMI value close to 50 suggests relatively stable activity levels within the sector.

PMI is used to measure the pace and trend of economic activity. A high PMI value indicates strong economic growth and increased activity within the sector, while a low PMI value indicates economic contraction.

PMI is closely monitored by investors, economists, and central banks as an important indicator. The PMI data plays a significant role in determining economic policies, conducting business cycle analysis, and making investment decisions.

PMI is published in many countries internationally and is used to compare activity levels across different sectors. Sub-indices, such as manufacturing PMI and services PMI, are used to analyze sectoral differences and trends.

PMI is considered a leading indicator of economic activity. A high PMI value can reflect expectations of continued economic growth, while a low PMI value can indicate an economic downturn. Therefore, PMI data is closely watched and utilized by markets and investors to make economic forecasts.