Purchasing Managers Index: Difference between revisions

The PMI is a survey-based indicator of business conditions, which includes individual measures (‘sub-indices’) of business output, new orders, employment, costs, selling prices, exports, purchasing activity, supplier performance, backlogs of orders and inventories of both inputs and finished goods, where applicable. The surveys ask respondents to report the change in each variable compared to the prior month, noting whether each has risen/improved, fallen/deteriorated or remained unchanged. These objective questions are accompanied by one subjective ‘sentiment’ question asking companies whether they forecast their output to be higher, the same or lower in a year’s time. <ref>https://www.spglobal.com/marketintelligence/en/mi/products/pmi-faq.html</ref>

PMI data are presented in the form of a diffusion index, which is calculated as follows

The two principal producers of PMIs are the Institute for Supply Management (ISM), which originated the manufacturing and non-manufacturing metrics produced for the United States, and the S&P Global (from 2022 merger with IHS Markit), which produces metrics based on ISM's work for over 30 countries worldwide.

* S&P uses the following weights: production (0.25), new orders (0.30), employment (0.20), supplier deliveries (0.15), and inventories (0.10), while ISM attributes each of these variables the same weighting (0.2) when calculating the overall PMI

* ISM's surveys cover all [[wikipedia:North_American_Industry_Classification_System|NAICS]] categories, and The S&P survey covers private sector companies, but not the public sector.<ref>https://en.wikipedia.org/wiki/North_American_Industry_Classification_System</ref>

For the US specifically, the ISM PMI is the most popular among economist and investors to rely for the economic outllook.  

== References: ==