Purchasing Managers’ Indexes™ (PMIs) have been developed in many countries to provide purchasing professionals, business decision makers and economic analysts with an accurate and timely set of data to help better understand industry conditions.
PMIs are based on monthly surveys of carefully selected companies. These provide an advance indication of what is really happening in the private sector economy by tracking variables such as output, new orders, stock levels, employment and prices across the manufacturing, construction, retail and service sectors.
The PMI surveys are based on fact, not opinion, and are among the first indicators of economic conditions published each month. The data are collected using identical methods in all countries so that international comparisons may be made.
The surveys achieve considerable press coverage on a regular basis and are widely used by purchasing professionals in the manufacturing sector, by senior management across the corporate sector and by economic analysts in financial institutions. In particular, central banks in many key economies use the data to help guide interest rate decisions.
Key features of PMI data:
provide reliable fact-based indicators as opposed to opinion or confidence-based indicators.
- are produced rapidly, and far faster than comparable official data series.
- are released on a monthly basis.
- cover almost all private sector economic activity in many countries (including the all-important service sectors).
- are not revised after publication.
- are produced using the same methodology in all countries where we operate, enabling accurate international comparisons.
In many cases, the advantages offered by PMI data reflect deficiencies in official economic statistics, which include:
1. Infrequent publication
Many government data series, such as gross domestic product (GDP), are published only quarterly. The PMI is published monthly.
2. Delays in publication
A significant period of time often elapses before official data are published. The PMIs provide data sometimes several months ahead of official series.
3. Subject to revision after first publication
Even once the official data are published, they are frequently subject to substantial revision. Such revisions mean it is hard to confidently make business decisions based only on these statistics. PMI data, in contrast, are not revised after first publication (with the exception of very minor occasional changes to seasonal adjustments).
4. Lack of comparability with equivalent measures used for other countries
Not all statistical bodies compile data using the same methodologies. Gross domestic product data for the Eurozone are, for example, compiled using significantly different statistical techniques than equivalent data for Japan.
The above problems result in a situation where purchasing professionals and economic analysts are attempting to monitor current industry conditions using data that are already out of date when published, which are possibly revised substantially after first publication and which are difficult to interpret against other countries’ data.
The PMI surveys have therefore been designed to provide business decision-makers with up-to-date, accurate and reliable data on which to benchmark performance and base business strategy.
» Keeping up to date with underlying business conditions
» Forward-looking indicators for your business
» Sales strategy: export markets
» Supply chain management
» Using PMI data to gauge general price trends