Purchasing managers index (PMI) definition
Purchasing Managers Index (PMI)
The purchasing managers' index (PMI) measures the economic wellbeing and direction of the manufacturing and services sectors. It looks at key indicators that show signs of retraction or growth in the economy such as inventory levels, production, and employment. As a result, the PMI provides insight and guidance to company decision-makers and investors.
The PMI is calculated monthly by the Institute for Supply Management (ISM), which gives the industry a number between 1-100. An index score above 50 indicates an expansion in the sector, and a score below 50 represents a contraction. A score of 50 indicates no change.
How is the Purchasing Managers Index calculated?
The Purchasing Managers' Index is calculated from an ISM survey sent out to senior leaders in the manufacturing industry. The survey focuses on five areas: orders, stock and inventory, production, supplier deliveries, and employment.