Purchasing Managers' Index

Purchasing managers' indexes (PMI) are economic indicators derived from monthly surveys of private sector companies.

[3] Purchasing managers' index (PMI) data are widely used often due to their ability to give a reliable indicator of key economic variables such as gross domestic product (GDP) and consumer price inflation (CPI).

Therefore, an index reading of 50.0 means that the variable is unchanged, a number over 50.0 indicates an improvement, while anything below 50.0 suggests a decline.

[9] These are New orders, Output, Employment, Suppliers' delivery times (inverted) and Stocks of purchases.

Due to the nature of their job function, it is important that purchasing managers are among the first to know when trading conditions, and therefore company performance, change for the better or worse.

[3] In each country, a panel of purchasing managers is carefully selected by S&P Global, designed to accurately represent the true structure of the chosen sector of the economy as determined by official data.

Generally, value added data are used at two-digit SIC level, with a further breakdown by company size analysis where possible.

[3] Particular effort is made to achieve monthly survey response rates of around 80%, ensuring that an accurate picture of business conditions is recorded over time.

For example, “Is your company’s output higher, the same or lower than one month ago?”[3] Respondents are asked to take expected seasonal influences into account when considering their replies.

[3] For each main survey question, respondents are asked to provide a reason for any change on the previous month, if known.

[3] The seasonal adjustment of PMI survey data is usually calculated using a combination of the X12 statistical programme of adjustment, as used by governmental statistical bodies in many developed countries, and alternative methods such as using the frequency of mentions by responding survey panel member companies for changes in variables where that mention is considered indicative of a seasonal variation.

Investors value this indicator because the Chicago region somewhat mirrors the United States overall in its distribution of manufacturing and non-manufacturing activity.