What is the Purchasing Managers Index (PMI)?

The Purchasing Managers Index (PMI) is a monthly economic indicator built from surveys of purchasing managers in a country's manufacturing and services sectors, tracking new orders, production, inventories, supplier deliveries, and employment to give an early read on business conditions.

Why does it move the market?

The PMI is one of the first indicators released each month, so it offers a forward-looking view of the economy before the official data arrives. Because purchasing managers sit at the front line of demand and supply chains, their collective sentiment is a reliable early barometer.

A stronger-than-expected reading points to expansion, which can lift the currency as markets price in tighter policy or faster growth. A weaker reading points to contraction and can weigh on the currency as traders anticipate looser policy.

When is it released?

Manufacturing PMI usually lands on the first business day of the month, with services PMI a few days later. Some providers also publish a mid-month 'flash' (preliminary) reading — an earlier but less complete look at the current month.

The US, Eurozone, UK, and China all report PMIs regularly. They are compiled by bodies such as S&P Global and, for the US manufacturing survey, the Institute for Supply Management (ISM).

How does a trader read it?

Everything hinges on the 50 level: above 50 signals expansion versus the prior month, below 50 signals contraction, and 50 means no change. A reading of 55 is clear growth; 47 a clear slowdown.

But the market moves on the surprise — how the actual compares to the consensus forecast. A beat can read as positive even when the number is still below 50, if traders expected worse. The rate of change month to month matters as much as the level.