Purchasing Managers' Index (PMI)

Posted on 2023-04-18

Purchasing Managers' Index (PMI) is an economic indicator that measures the health of the manufacturing sector in a country or region. The PMI is based on a monthly survey of purchasing managers who are responsible for making purchasing decisions in their companies.

The PMI measures various factors such as new orders, production, supplier deliveries, inventories, and employment levels. The survey results are then compiled into a single index number that indicates the overall health of the manufacturing sector. A reading above 50 indicates that the manufacturing sector is expanding, while a reading below 50 indicates that it is contracting.

The PMI is considered a leading indicator of economic growth because changes in the manufacturing sector can signal changes in the broader economy. A strong PMI reading suggests that the economy is growing, while a weak reading suggests that it is contracting. Traders and investors use the PMI to anticipate changes in the economy and adjust their trading strategies accordingly.

The PMI is published by a number of organizations around the world, including the Institute for Supply Management (ISM) in the United States, the Markit Group in Europe, and the China Federation of Logistics and Purchasing (CFLP) in China.

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