The Purchasing Managers’ Index (PMI) is a leading barometer for assessing the health of a country’s economy, particularly in the manufacturing and services sectors. Published monthly, the index is based on surveys of purchasing managers in various sectors, making it a real-time indicator of economic activity.

Created by research institute IHS Markit, the PMI measures the overall performance of companies across several criteria: production, new orders, employment, inventories and delivery times. There are two main types of PMI: the Manufacturing PMI, which focuses on industry, and the Services PMI, which assesses the tertiary sector. These two indices are then consolidated to give an overall view of the economy.

The index operates on a scale from 0 to 100. A value above 50 means that economic activity is expanding, while a value below 50 reflects contraction. For example, if a country’s PMI shows 55, this indicates robust growth in the sector concerned. Conversely, a PMI of 45 indicates a slowdown in activity.

The PMI index is particularly appreciated by investors, economists and policy-makers for its ability to provide early indications of the state of the economy. Indeed, survey results, which are published ahead of many other official economic data, enable early detection of signs of economic slowdown or acceleration.

Changes in the PMI index can have a significant impact on financial markets, influencing companies’ production, investment and hiring decisions. As such, this indicator is often seen as an essential economic forecasting factor, capable of anticipating growth and recession cycles.