Also called: purchasing managers index, manufacturing pmi, services pmi
A monthly survey of business managers measuring expansion or contraction in manufacturing and services — readings above 50 mean growth.
PMI is a survey-based indicator that asks purchasing managers at hundreds of companies whether business conditions are improving, staying the same, or getting worse. The result is a single number where 50 is the dividing line between expansion and contraction. Above 50 = the sector is growing. Below 50 = the sector is shrinking.
There are two main PMIs: Manufacturing PMI (factories, production, shipping) and Services PMI (banking, hospitality, retail). In modern economies, services dominate — services PMI is now more important than manufacturing PMI for most major currencies.
PMIs are leading indicators. They're released BEFORE the hard data (GDP, retail sales, employment) and they often signal turning points 2-3 months ahead. A PMI dropping from 55 to 49 is a strong recession warning even if GDP is still growing.
The Aug 2024 US ISM manufacturing PMI printed 47.2 — its weakest in nearly a year. The print sent the dollar down 60 pips and accelerated rate-cut expectations heading into the September FOMC.
Frequently asked about pmi (purchasing managers index)
What is a pmi (purchasing managers index) in trading?+
A monthly survey of business managers measuring expansion or contraction in manufacturing and services — readings above 50 mean growth.
When will I see pmi (purchasing managers index) used in real trading?+
First trading day of every month for the previous month's data. One of the highest-impact macro releases each month.
What is the most common mistake traders make with pmi (purchasing managers index)?+
Trading PMI levels without checking the trend. A reading of 51 sounds positive, but if last month was 54 and the month before was 56, the trend is collapsing — that's bearish even though the absolute number is still expansionary.
What do experienced traders know about pmi (purchasing managers index) that beginners don't?+
Watch the gap between Manufacturing PMI and Services PMI. When manufacturing is collapsing but services are strong, the economy is in a soft transition. When BOTH are contracting, recession is here.
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