Most major economies have purchasing managers indices (PMI) released
monthly. They are compiled by various organizations. Some focus on the
manufacturing sector while others measure the service sector. They are a
very current measure of the economic health of the manufacturing or
services sector. The PMI indices are usually based on five major
indicators: new orders, inventory levels, production, supplier
deliveries and the employment environment.
A PMI of greater than 50 represents expansion, compared to the previous
month. A reading under 50 represents a contraction, while a reading at
50 indicates no change.
We find the PMI indices to be useful predictors of future economic