What is it? The Purchasing Managers Index (PMI) is a monthly survey-based economic indicator that measures business activity in the manufacturing and services sectors. A reading above 50 generally signals expansion, while a reading below 50 suggests contraction.
Why is it important? PMI is considered a leading economic indicator because it provides an early look at business conditions, production levels, demand, and employment trends before many other economic reports are released.
How does it show up in real life? Investors, economists, and policymakers closely monitor PMI releases for clues about the direction of the economy, corporate earnings, and potential interest rate changes.
Bottom line: PMI helps provide an early snapshot of economic momentum and is one of the most widely followed measures of business activity.
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