Purchasing Managers' Index (PMI)
purchasing managers' index · PMI · ISM manufacturing
The Purchasing Managers' Index (PMI) surveys company purchasing managers on orders, output, hiring and more versus the previous month; readings above 50 signal expansion and below 50 contraction.
In plain terms
Purchasing managers feel changes in demand before almost anyone else. The PMI asks them whether new orders, output and hiring rose or fell, and turns the answers into a score. Fifty is the dividing line: 50.5 means slightly better, 48 means worse.
In the US, the Institute for Supply Management (ISM) PMI is the best-known version; China's National Bureau of Statistics publishes an official PMI around the end of each month. Manufacturing and services are reported separately.
Why it matters
PMIs arrive early each month and show the direction of the economy much faster than GDP. The new-orders component hints at future production, and the prices component flags inflation pressure.
How it connects to markets
- Above 50 or beating forecasts: cyclical stocks and commodities, especially copper, tend to rise; fewer expected rate cuts
- Stuck below 50: a contraction signal, lower yields and a tilt toward defensive stocks
- China's PMI: moves commodity prices and the stock markets of China-exposed exporters such as South Korea and Taiwan