Purchasing Managers Index (PMI)

black and white image of a graph that represents purchasing managers index

 

 

What is the Purchasing Managers Index?

The index is based on a survey of purchasing managers in the manufacturing and service sectors. It analyzes new orders, inventory levels, production, supplier deliveries, and employment. Built on the answers provided it summarizes whether market conditions are expanding, staying the same, or contracting. The results of the index are used by decision makers, analysts, and investors to clarify current and future business conditions. A reading above 50 shows expansion, below 50 shows contraction, and at 50 indicates no change.

 

Why is the Purchasing Managers Index valuable?

Depending on your role within the industry, the Purchasing Managers Index will be useful in different ways. Manufacturers may use the PMI to make parts and raw material purchases. Suppliers will use the PMI to gauge demand for their products. This may in turn influence their prices to customers.

 

What should you do?

If you’re looking for an indicator that highlights economic activity and output, following the Production Managers Index is a great place to start. Majestic’s CORE Report follows the Production Managers Index; along with other indicators every week to see where the market stands.

 

Source: Investopedia.com