PMI: Purchasing Managers’ Index

The ISM Manufacturing PMI averages 5 survey indexes: new orders, production, employment, supplier deliveries and inventories.

The PMI serves as a crucial tool for gauging the current state of the business sector.

Key Thresholds

• Above 50: manufacturing is expanding.
• Below 50: manufacturing is shrinking.
• ISM says a reading above 47.5 over time is consistent with the whole economy growing.

A declining PMI may indicate reduced business optimism about future prospects, often resulting in decreased spending and hiring. Both can come before a recession.

Track It Yourself

Simple tracking method:

1. Draw a red line at 50
2. Install the “US recessions” indicator

Related Articles:

• New Orders
• Housing Permits