PMI definition

PMI stands for purchasing managers index, a useful indicator of health in a particular sector within an economy. In the UK, Markit produce a PMI for the manufacturing, services and construction industries.

Often, PMI is a useful proxy for GDP, as PMI releases can be timelier and sometimes give a better snapshot representation of an economy than quarterly GDP figures.

A PMI of 50 means that the sector in question has not changed when compared to the previous month. If PMI is more than 50 then the sector has expanded, and if it is less than 50 the sector has contracted.

Despite the drop in manufacturing’s prominence in many economies, manufacturing PMI is still viewed as an important economic indicator for many analysts and traders. 

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