Global Manufacturing Purchasing Managers’ Index (PMI)
The Global Manufacturing Purchasing Managers' Index (PMI) is an economic indicator of the manufacturing sector.
The PMI is determined through a monthly survey aimed at senior executives from various companies worldwide, across diverse industries in the private sector. These industries are selected, and the results are weighted to reflect their contribution to the Gross Domestic Product (GDP) of each country. The global PMI is then calculated based on the national PMI of individual countries.
The survey’s purpose is to inquire about the state of the business, and whether these conditions are improving or worsening. There are five equally weighted key areas: new orders, inventory levels, production, supplier deliveries, and employment.
Survey takers must evaluate and provide answers based on their industry observations. The result, a PMI number between 0 and 100, is then calculated.
There are three factors to look at when interpreting the result:
- Direction: An index above 50 signifies growth, and vice versa.
- Speed: The distance from 50 indicates how fast the sector changes. A PMI number closer to 50 suggests little change in the industry.
- Duration: How long the PMI remains above or below 50 may indicate a trend in the sector's performance.
PMI is beneficial for business operators, suppliers, investors, and policymakers to gauge the current state of the economy. They may then use these results to fuel their analysis.
Logistics and transport companies may also look at the PMI, as changes in manufacturing activities may lead to changes in demand for these industries.