Purchasing Managers Index (PMI) (Download PDF)

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The Purchasing Managers Index is defined as an index in the manufacturing and service sector interims of the prevailing direction of economic trends. This index gives an indication whether the market conditions are expanding, staying the same or contracting consisting of a diffusion index. This index provides information to the company decision makers, analysts and investors relating to the current and future business conditions.

This is Image show in Global manufacturing PMI Survays

This is Image Show in Global Manufacturing PMI Survays

This is Image show in Global manufacturing PMI Survays

This is Image show in HSBC India manufacturing PMI

This is Image Show in HSBC India Manufacturing PMI

This is Image show in HSBC India manufacturing PMI

Features of PMI

  • Measure of the prevailing direction of economic trends in the manufacturing and service sector

  • It is based on the upstream and downstream activity of the monthly survey of supply chain managers across 19 industries.

  • The PMI value can provide useful information to the market analysts, business decision maker and investors.

  • The ISM manufacturing index measues activity based on the surveys provided by the managers is better known as the purchasing Manager’s Index.

PMI Derivation & Readout

  • The PMI is derived from a series of qualitative questions.

  • The key indicators such as output, new orders, business expectations and employment data are compared with that of the previous month.

  • The rating is done based on the fact that the current data is stronger or weaker as compared to the previous month data by the Executives.

  • The Headline PMI is from 0 to 100.

  • Expansion in business activity means a figure above 50 which can also be judged by by comparing the PMI with that of the previous month data.

  • A Data below 50 denotes contraction.

  • If the figure is higher than the previous month’s then the economy is expanding at a faster rate.

Impact on the Economy and Financial Market

  • One of the best indicators of indicating the economic activity ups and downs.

  • This Index is released at the start of the month usually. The other official data on industrial output, manufacturing and GDP growth becomes available after PMI only.

  • The manufacturing growth measured by the PMI is considered as a good indicator of industrial output, for which official statistics are released later.

  • Central banks of many countries also use this index to help make decisions on interest rates

  • The corporate earnings are closely watched by investors as well as the bond markets. A good reading enhances the attractiveness of an economy helps in competing with the other economies.

- Published/Last Modified on: July 16, 2019

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