Purchasing Managers' Index

The Purchasing Managers' Index is a monthly economic indicator that measures the prevailing direction of trends in the manufacturing and services sectors. The index is based on surveys of private-sector purchasing managers who report on key business conditions at their companies, including new orders, inventory levels, production, supplier deliveries and employment. Respondents indicate whether conditions are improving, staying the same or deteriorating, and the results are compiled into a diffusion index where a reading above 50 indicates expansion, below 50 signals contraction, and 50 represents no change. The PMI is considered a leading indicator of economic health because purchasing managers have early insight into company performance and supply-chain dynamics. Major economies publish their own PMI data, compiled by organisations such as S&P Global and national industry bodies, with manufacturing and services indices often released separately. In South Africa, Absa publishes a widely watched manufacturing PMI that tracks sentiment and activity in the country's industrial sector. The index is closely monitored by policymakers, investors and analysts as a timely gauge of economic momentum, often moving markets when released. Because the survey is conducted monthly and published quickly, the PMI typically provides insight into economic conditions before official statistics such as GDP become available. The methodology and weighting of sub-components can vary slightly between countries, but the core principle of surveying purchasing managers for forward-looking sentiment remains consistent globally.