Purchasing Managers' Index

Purchasing Managers' Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. The data for the index are collected through a survey of 400 purchasing managers in the manufacturing sector on seven different fields, namely, production level, new orders from customers, speed of supplier deliveries, inventories, order backlogs and employment level. Respondents can report either better, same or worse conditions than previous months. For all these fields the percentage of respondents that reported better conditions than the previous months is calculated. The five percentages are multiplied by a weighing factor (the factors adding to 1) and are added.

The two principal producers of PMIs are the Institute for Supply Management (ISM), which originated the manufacturing and non-manufacturing metrics and which produces them for the United States, and the Markit Group, which produces metrics based on ISM's work for over 30 countries worldwide.

ISM and Markit Group separately compile Purchasing Managers' Index (PMI) surveys on a monthly basis by polling businesses which represent the makeup of the respective business sector. ISM's surveys cover all NAICS categories. The Markit survey covers private sector companies, but not the public sector.

ISM began to produce the report for the United States in 1948. The surveys are released shortly after the end of the reference period. The actual release dates depend on the sector covered by the survey. Manufacturing data are generally released on the first business day of the month, followed by construction (Markit only) on the second working day, and non-manufacturing/services on the third business day.

The Chicago-PMI survey, owned by Deutsche Börse, registers manufacturing and non-manufacturing activity in the Chicago Region. Investors value this indicator because the Chicago region somewhat mirrors the United States overall in its distribution of manufacturing and non-manufacturing activity.

The predominant operator and owner of Purchasing Managers Index series outside the USA is the Markit Group Markit issue most of their PMIs in partnership with other companies.

The Markit and ISM Purchasing Managers Indices include additional sub indices for manufacturing surveys such as new orders, employment, exports, stocks of raw materials and finished goods, prices of inputs and finished goods.

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