Purchasing Managers Index (PMI) is released on the first business day
of each month. It is maintained,
surveyed, and released by the Institute for Supply Management (ISM). This index
comprises production level, inventories, new orders from customers, employment
level, and supplier deliveries, which are surveyed on 300 manufacturing
firms. PMI is a key sentiment indicator
for the whole economy, especially for the manufacturing sector. A reading of 50 is the cutoff. A reading
greater than 50 means an expansion, otherwise a shrinkage.
An old saying, “The stock market action of the first day of each month
will predict the rest of the month” might apply here. Jim O’Neill, the former
Goldman Sachs economist, thought the PMI numbers were among the most reliable
indicators in the world!
Not just the USA delivers the PMI monthly. Markit, HSBC, JP Morgan,
RBC, and other major data collecting institutions distribute the most updated
figures of PMI for many countries.
China’s PMI is broadcasted the last day of each month due to time zone
differences.
Worst-than-expected Chinese PMI data triggered profit-taking, thus the
US stock market started 2014 with a whimper.
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