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What is a purchasing managers' index? The early signal for an economy

By SendPay Business · · 2 min read

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A purchasing managers' index, or PMI, is a monthly survey of business buyers that shows whether activity in part of the economy is growing or shrinking. Because it comes out early each month, it is one of the first signals of how an economy is doing.

How it works

  • Purchasing managers at many companies are asked whether things like new orders, output and staffing went up, down or stayed the same.
  • The answers are turned into a single number.
  • A reading above 50 means activity is growing, and below 50 means it is shrinking.
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Types of PMI

There are separate PMIs for manufacturing and for services, and often a composite that combines both. S&P Global publishes PMIs for many countries, and in the US the Institute for Supply Management publishes its own widely watched surveys.

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Why currencies move

A stronger-than-expected PMI can suggest a healthier economy and higher interest rates ahead, which can lift a currency. A weak reading can do the opposite. As with other data, the surprise against forecasts matters most.

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Questions people ask

What is the consumer price index?

The main measure of how fast prices are rising.

CPI →
What are non-farm payrolls?

A monthly US jobs report that often moves currencies.

Non-farm payrolls →
What is a recession?

A period when the economy shrinks instead of growing.

Recessions →

Read next

Spotted a mistake or something out of date? and we'll fix it. How our guides are made

This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.