Purchase Managers Index or PMI is set up in order to help decision makers and analysts to understand the industry conditions. Based on a monthly survey of selected companies, the UK PMI survey offers advanced insights into the private sector economy. It takes into consideration various elements such as number of new orders, stock levels, employment, across various sectors such as manufacturing, construction, retails and services. Read about the UK PMI Construction Index.
The PMI survey is compiled on a monthly basis by Markit and CIPS (Chartered Institute of Purchasing and Supply). The PMI is a keenly watched affair because the data compiled gives a forward looking approach, in comparison other economic indicators such as the GDP for example looks back upon the past data. The Purchase Managers Index is a realiable indicator of the UK’s economy as the results are revised over time when more data is available. The results published are factual thus making the PMI more reliable source and eliminating variables of confidence of sentiment.
Analysts eagerly await the PMI survey data as it indicates the companies across sectors performance and thus can be a leading indicator to economic growth and indirectly shed light on the GDP.
How is the PMI Compiled
Participating businesses in the PMI survey are asked questions on variables such as output and export orders, stock levels, delivery times and so on. From these and many more variabls, 5 sub indices are multiplied so as to create a composite headline index. The PMI data is released during the first three working days of the month, for the previous month in order of manufacturing sector, followed by the construction sector and finally the services sector.
UK Purchase Managers Index – History
When reading the Purchase managers index, a reading below 50 is often considered to be showing signs of economic slowdown, while the contrary indicates growth. Therefore, a PMI reading of less than 50 is considered to be negative. Comparing the past UK PMI data, the latest reading for the month of July showed 45.4, way below the benchmark of 50. Earlier during the year the PMI data reached the 50 level during April, but quickly dropped below this region, marking a slowdown in the UK domestic markets.
UK PMI Summary
Measures: Business activity across Manufacturing, Construction and Services sector
Release Time: 0830 GMT
Release Address: http://www.markiteconomics.com/Survey/Page.mvc/PressReleases