The Purchasing Managers' Index (PMI) is an indicator of economic activity. Roughly speaking it reflects the percentage of purchasing managers in a certain economic sector that reported better or worse business conditions than in the previous month. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
PMI's are compiled on a monthly basis by polling businesses that represent the make up of the respective sector. The surveys cover private sector companies, but not the public sector.
A PMI of more than 50 represents expansion of the manufacturing sector, compared to the previous month. A reading under 50 represents a contraction, while a reading at 50 indicates no change.
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