PMI

PMI, the Purchasing Managers' Index, is a survey based gauge of business activity, built by asking purchasing managers at companies whether new orders, production, employment, and prices rose, fell, or stayed the same compared to the prior month. A reading above 50 signals expansion, and a reading below 50 signals contraction.

In the United States, the Institute for Supply Management publishes separate manufacturing and services PMI readings each month, and both are watched closely as timely indicators of economic momentum. Because a PMI survey captures what business managers are seeing right now in orders and production, it tends to shift before slower moving hard data like GDP growth confirms a change in direction.

This makes PMI a useful early tool for gauging where the business cycle stands. A PMI that slips below 50 for several months in a row is often taken as an early warning sign of a slowdown, well before other data catches up to confirm it.