The Markit PMI, or the Purchasing Managers’ Index, tracks business conditions over thirty counties, becoming one of the most closely watched economic indicators in the world. By analyzing variables such as output, net orders, unemployment, and prices across key sectors, this index provides information regarding the private sector economy. Ultimately, economic analysts, business decision makers, forecasters, banks, and policy makers, often use PMI to understand the business conditions of a particular economy.
The Institute for Supply Management (ISM), is the non-profit group responsible for updating and releasing the PMI. As a monthly ISM Report on Business, information is released based on five different “sub-indicators.” These five indicators include the production level, new orders from customers, supplier deliveries, inventories, and employment level. In order to establish the data, the index of the sub-indicators are established by surveying more than 400 purchasing managers worldwide. The purpose of the PMI is to offer reliable fact-based information on a monthly basis. Unlike other indexes, the PMI is produces at a much faster rate, and uses the same methodology as international comparisons. Likewise, PMI is used readily due to its numerous conveniences. In fact, one of PMI’s advantages is that the information is released on a fixed time cycle, the first day following the survey month. It is also found that the Purchasing Manager’s Index is an excellent predictor, especially when dealing with GDP and the Bureau of Labor Statistics manufacturing reports. In addition, advantages within the report include the anecdotal remarks, which provides perspectives from professional economists and various experts. RG- BU’18