Purchasing Managers Index
The Purchasing Managers Index (PMI), also “ISM Manufacturing Index” or “ISM Purchasing Managers Index ”, is the most important and most reliable leading indicator of economic activity in the USA . It is published by the Institute for Supply Management (ISM), a US non-profit organization based in Tempe, Arizona .
concept
The Purchasing Managers Index (PMI, also ISM Manufacturing Index) is a weighted index made up of five out of ten sub-indices (weighting in brackets): incoming orders (30 percent), production (25 percent), employment (20 percent), deliveries received (15 percent ) and inventory (10 percent). For each answer to the survey, the On Business report provides the percentage, the net difference between the number of positive answers about the economy and the negative feedback, as well as the diffusion index (sentiment indicator).
The Business Survey Committee is composed according to the Standard Industrial Classification (SIC), the classification scheme for different branches of industry, which is based on the share of each branch in the gross domestic product (GDP). Twenty industries from different geographic regions of the USA are represented in the Standard Industrial Classification.
The strengths of the index include up-to-date information on manufacturing activity, the selection of 20 manufacturing industries and the linkage of the index to changes in GDP. The weaknesses include the failure to record the wage and salary components as well as technological changes or production efficiency. The limitation of the answers to three options (slower, faster and unchanged) is one of the points of criticism.
The ISM Manufacturing Index (ISM manufacturing index) is an important and reliable leading indicator of economic activity in the USA. However, it must be taken into account that the gross value added of the manufacturing industry in the USA in 2011 was only 12.2 percent of the gross domestic product. In March 2012, of 132.8 million employees outside the agricultural sector, only 11.9 million were employed in manufacturing. This economic sector has lost its importance in GDP for decades, which is documented, among other things, in the relocation of production abroad and the trade deficit .
survey
Economic sectors
The survey is based on 20 different areas of manufacturing:
Food, tobacco, textiles, clothing, wood and wood products, furniture, paper, printing and publishing houses, chemical products, mineral oil, rubber and plastic products, leather, glass, stones and aggregates, base metals, metal products, industrial and commercial equipment and computers, Components and Electronic Equipment, Transportation and Equipment, Photographic Apparatus and Equipment.
Others: jewelry, toys, sports equipment, musical instruments and others.
Subject areas
The purchasing managers of US companies are currently being surveyed on the following ten topics:
- Incoming orders
- Order backlog
- Incoming orders in export
- Imports
- production
- Deliveries received
- Stock
- Customer base
- employment
- Prices
Seasonal adjustment
Many of the sub-indices show distinctive seasonal patterns that can be traced back to seasonal weather influences, social conditions and the different number of working days or holidays in the individual months. Only seasonally adjusted indices are meaningful for assessing economic development trends. The seasonal adjustment of the Purchasing Managers Index is based on the Institute for Supply Management indirectly through the seasonal adjustment of the sub-indices. In order to adjust the time series, so-called seasonal factors are determined for each month, which modify the respective original values in order to obtain the seasonally adjusted data.
rating
The Purchasing Managers Index (PMI) shows the development of US industrial production . A value of 50 is regarded as neutral, a value above 50 points as a rising and a value below 50 points as a falling industrial production. The index is on average three to six months ahead of actual industrial production.
The financial markets react sensitively to unexpected changes in the index; it is perceived as a leading indicator for economic developments as well as rising inflation . PMI, Consumer Confidence Index and University of Michigan Consumer Sentiment Index , like the Case-Shiller Index , the FHFA House Price Index or the oil price, belong to the group of indicators whose development noticeably influence the stock indices .
history
Historical overview
The Institute for Supply Management (ISM), a US non-profit organization based in Tempe (Arizona) , publishes the On Business report for the US manufacturing industry with the Purchasing Managers Index (PMI ) on the first working day of the month ) as the core element. The report collects data from a survey of purchasing managers from 400 industrial companies and has been published since 1931 , with one interruption during the Second World War .
The current principle of the PMI was developed in 1982 by Theodore Torda, an economist at the US Department of Commerce . The indicator used to be published under the name NAPM-Index. In May 2001, the members of the National Association of Purchasing Management (NAPM), founded in 1915, decided to change the name of the association to Institute for Supply Management.
The all-time high of the Purchasing Managers Index was recorded in July 1950 at 77.5 points. The index only achieved values above 70 points in December 1972 with 70.5 points and in January 1973 with 72.1 points. In May 1980 the PMI hit an all-time low of 29.4 points. In the course of the following recession from 1980 to 1982, the gross domestic product (GDP) of the USA fell by 2.0 percent in real terms in 1982, the low point of the economic downturn (for comparison: during the Great Depression in 1932, GDP shrank by 13.0 percent in real terms). The US unemployment rate in 1982 was 9.7 percent (1932 = 23.6 percent) and the number of unemployed was 10.7 million (1932 = 12.1 million).
The index achieved values of just over 30 points in December 1974 with 30.9 points, in January 1975 with 30.7 points and in June 1980 with 30.3 points. The index predicted the economic recovery after the recession from 1990 to 1991 two months in advance, the recovery from 1999 (end of the Asian crisis ) four months beforehand. In December 2008, the Purchasing Managers Index fell to 33.1 points, its lowest level since June 1980. As the US economy recovered, so did the PMI. In January 2011 a value of 59.9 points was determined.
In November 2012, at 49.5 points, the Purchasing Managers Index fell to the level of July 2009. For the first time since August 2012, the barometer was below the growth threshold of 50 points. Concerns about a collapse in the US economy and another relapse into recession, also known as double-dip, increased.
Annual development
The Institute for Supply Management does not correct the data in the Purchasing Managers Index on a monthly basis. An audit is performed at the beginning of the year, usually for several years, after the United States Department of Commerce has endorsed the seasonal adjustment. The following table shows the annual highs and lows of the PMI calculated back to 1948.
| year | Peak | Lowest point | Final stand |
|---|---|---|---|
| 1948 | 53.0 | 35.0 | 35.0 |
| 1949 | 57.3 | 31.3 | 57.3 |
| 1950 | 77.5 | 59.1 | 67.1 |
| 1951 | 69.3 | 42.1 | 46.5 |
| 1952 | 60.4 | 36.7 | 55.8 |
| 1953 | 59.4 | 35.6 | 35.6 |
| 1954 | 63.8 | 37.4 | 63.8 |
| 1955 | 69.5 | 62.0 | 65.6 |
| 1956 | 60.2 | 44.2 | 52.7 |
| 1957 | 53.6 | 36.8 | 36.8 |
| 1958 | 62.7 | 33.4 | 60.5 |
| 1959 | 68.2 | 48.3 | 58.2 |
| 1960 | 61.5 | 42.6 | 44.3 |
| 1961 | 64.2 | 43.6 | 64.2 |
| 1962 | 61.1 | 49.5 | 57.2 |
| 1963 | 59.8 | 54.0 | 54.0 |
| 1964 | 63.3 | 57.1 | 62.4 |
| 1965 | 64.9 | 58.1 | 62.8 |
| 1966 | 65.8 | 52.4 | 52.4 |
| 1967 | 55.6 | 42.8 | 55.6 |
| 1968 | 58.1 | 51.8 | 56.1 |
| 1969 | 57.1 | 52.0 | 52.0 |
| 1970 | 51.1 | 39.7 | 45.4 |
| 1971 | 57.6 | 47.9 | 57.6 |
| 1972 | 70.5 | 58.6 | 70.5 |
| 1973 | 72.1 | 57.8 | 63.6 |
| 1974 | 62.1 | 30.9 | 30.9 |
| 1975 | 55.5 | 30.7 | 54.9 |
| 1976 | 61.5 | 51.7 | 56.6 |
| 1977 | 59.8 | 53.9 | 59.8 |
| 1978 | 62.2 | 55.0 | 59.4 |
| 1979 | 58.5 | 44.8 | 44.8 |
| 1980 | 58.2 | 29.4 | 53.0 |
| 1981 | 53.5 | 36.1 | 37.8 |
| 1982 | 42.8 | 35.5 | 42.8 |
| 1983 | 69.9 | 46.0 | 69.9 |
| 1984 | 61.3 | 50.0 | 50.6 |
| 1985 | 52.0 | 47.1 | 50.7 |
| 1986 | 53.4 | 48.0 | 50.5 |
| 1987 | 61.0 | 52.6 | 61.0 |
| 1988 | 59.3 | 54.6 | 56.0 |
| 1989 | 54.7 | 45.1 | 47.4 |
| 1990 | 50.0 | 40.8 | 40.8 |
| 1991 | 54.9 | 39.2 | 46.8 |
| 1992 | 55.7 | 47.3 | 54.2 |
| 1993 | 55.8 | 49.6 | 55.6 |
| 1994 | 59.4 | 56.0 | 56.1 |
| 1995 | 57.4 | 45.9 | 46.2 |
| 1996 | 55.2 | 45.5 | 55.2 |
| 1997 | 57.7 | 53.1 | 54.5 |
| 1998 | 53.8 | 46.8 | 46.8 |
| 1999 | 58.1 | 50.6 | 57.8 |
| 2000 | 56.7 | 43.9 | 43.9 |
| 2001 | 46.3 | 40.8 | 45.3 |
| 2002 | 53.6 | 47.5 | 51.6 |
| 2003 | 60.1 | 46.1 | 60.1 |
| 2004 | 61.4 | 56.2 | 57.2 |
| 2005 | 56.8 | 50.8 | 55.1 |
| 2006 | 55.8 | 50.3 | 51.4 |
| 2007 | 52.6 | 49.0 | 49.0 |
| 2008 | 50.3 | 33.1 | 33.1 |
| 2009 | 55.8 | 34.9 | 55.8 |
| 2010 | 59.3 | 55.7 | 57.3 |
| 2011 | 59.9 | 51.4 | 53.1 |
| 2012¹ | 54.8 | 49.5 | 50.7 |
¹ December 31, 2012
People's Republic of China
In the PR China, the state statistical office determines an industry PMI and PMIs for some industries every month. The PMI collapsed in February 2020 due to the rampant coronavirus epidemic (from 50 points in January 2020 to 35.7 points).
Web links
Individual evidence
- ↑ Markt-Daten.de: ISM - Index, processing. Commercial ( Memento of the original of September 26, 2010 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ US Bureau of Economic Analysis: Value Added by Industry as a Percentage of Gross Domestic Product ( Memento of the original from May 1, 2016 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ a b Dexia: Institute for Supply Management ( page no longer available , search in web archives ) Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.
- ↑ University of Wisconsin-La Crosse: Unemployment, Inflation, and Productivity ( Memento of the original from January 30, 2012 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. ( MS PowerPoint ; 835 kB)
- ↑ Financial Times Deutschland: Weak ISM index: US industry is shrinking for the first time in three years ( memento of July 4, 2012 in the Internet Archive ), of July 2, 2012
- ^ Institute for Supply Management: Historical Data
- ↑ Federal Reserve Bank of St. Louis: Historical Data
- ↑ china.org.cn : China's manufacturing PMI slightly down in January
- ↑ china.org: China's manufacturing PMI drops in February amid epidemic , Xinhua February 29, 2020.
