Purchasing Managers' Index
A survey-based index of business conditions, where readings above 50 indicate expansion and below 50 contraction.
Formula
PMI = weighted diffusion index of survey responses on output, new orders, employment, supplier deliveries and stocks
Unit
index points
In depth
The PMI is a diffusion index measuring direction rather than magnitude: 55 means more firms reported improvement than deterioration, not that output grew 5%. This is the most common misreading — a fall from 58 to 54 means conditions are still improving, just less broadly. Its value is timeliness, since it is published within days of the month's end while official production data takes weeks. It is a survey of sentiment among purchasing managers, so it captures perception, which usually but not always tracks activity.
Worked example
A manufacturing PMI falling from 58.3 to 54.1 is reported as a slowdown. Both readings are above 50, so activity expanded in both months — the second expansion was simply less widespread.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Purchasing Managers' Index” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.