The Purchasing Managers' Index (PMI) is a comprehensive index compiled through monthly surveys of corporate purchasing managers. It covers various aspects such as corporate purchasing, production, and circulation, and is one of the internationally recognized macroeconomic monitoring indicators. It plays a crucial role in monitoring and forecasting national economic activity. The PMI encompasses fields such as production and circulation, manufacturing and non-manufacturing, and is divided into Manufacturing PMI and Services PMI. Some countries have also established Construction PMI.
How to Calculate PMI
PMI = Order Weight × 30% + Production Weight × 25% + Employment Weight × 20% + Supplier Performance Weight × 15% + Inventory Weight × 10%.
The PMI is expressed as a percentage, often with 50% serving as the dividing line between economic strength and weakness:When the index is above 50%, it is interpreted as a signal of economic expansion.When the index is below 50%, there are concerns about economic recession.Generally, when it is between 40 and 50, it indicates that the manufacturing industry is in decline, but the overall economy is still expanding.
