What the PMI Indicates

Paper Summary:

The paper discusses the purchasing managers index (PMI) and its various indicators. The paper emphasises the employment component, both past and present, as it relates to the manufacturing sector. The paper further examines new and emerging technology and its effect on the employment factor within the PMI and on the manufacturing sector in the US.

From the Paper:

"The Purchasing Managers Index (PMI) has been one of the primary indices for gauging manufacturing and manufacturing inventory levels in the US since 1948. The PMI measures a series of leading manufacturing indicators and as such is a composite index: 1) new orders at a 30% weight, 2) production at a 25% weight, 3) employment at a 20% weight, 4) supplier deliveries at a 15% weight, and 5) inventories at a 10% weighted value(The par.1). The PMI is a useful tool in gauging the overall state of the economy, gross domestic product (GDP), and specifically the state of the manufacturing sector. Its base value is read from a median of 50% and is interpreted in the following manner: * A PMI above 50% is indicative of a manufacturing sector in expansion. * A PMI below 50% is indicative of a manufacturing sector in decline."

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