PMI
Purchasing Managers’ Index
Short definition
PMI is a diffusion index from a survey of purchasing managers on orders, output, jobs and deliveries. The 50 line splits expansion from contraction; it is a direction signal, not a level.
Detailed explanation
New orders and deliveries sub-indices tell more for inventory and price. Manufacturing and services PMIs tell different cycles.
It leads GDP and IP but the sample is small and is not revised. One month below 50 is not a recession.
Why it matters for the CFO
If materials buying does not line up with PMI new orders, inventory bloats. When credit conditions tighten with PMI, cash squeezes.
How it is calculated
PMI: 50 = değişim yok; >50 genişleme, <50 daralma (yayılma endeksi)
A diffusion index: the share of “expanding” replies. 50 is neutral; the print is not a GDP point.
Variables in the formula
- 50: expansion/contraction threshold
How to read it
Distance from 50 is speed, not a level of activity. The export-orders sub-index is read for external demand.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.