PMI / ISM (Purchasing Managers Index)
An index built from surveying company purchasing managers — above 50 is expansion, below is contraction. A leading indicator for quickly reading the economy's direction.
In plain terms
PMI is built by asking company purchasing managers "did orders, production, and hiring rise this month versus last?" In the US, the one from an institution called the ISM is the leading one.
It is simple to read. 50 is the line: above 50 leans toward an improving (expanding) economy, below 50 toward a worsening (contracting) one. Being the voice from the field, it shows the economy's direction fast.
What it tells you
PMI is a "leading indicator" that comes out before actual statistics (GDP, employment). Being the on-the-ground sense of managers, it is strong at quickly catching the inflection points where the economy turns.
Look at manufacturing PMI and services PMI separately. The US has a large services share, so together they tell you which side of the economy is strong.
Formula
PMI = an index built by surveying company purchasing managers on production, new orders, employment, etc. the 50 line: above 50 = expansion · below 50 = contraction (in the US, the ISM index is the leading one)
What high or low means
PMI breaking above 50 is read as an expansion signal; falling below, a contraction signal. Watch especially closely the moment direction changes near 50.
The flow of "rising or falling versus last month" matters as much as the absolute level.
PMI is a "survey (sense)," so it sometimes diverges from actual production and consumption statistics. It is good for quickly reading the mood, but it is not itself a settled economic result.
Near 50, even a small change flips between expansion and contraction, so read a multi-month trend rather than one month's number.
PMI/ISM is a macro indicator. This term is background for understanding market news. (※ Our screen handles individual companies' SEC-filed financials.)
Metrics to read alongside
See it in real stocks
Search US stocks on Stocklore to see PMI and other financial metrics alongside the sector average.
This explanation is for information and reference only and is not a recommendation to buy or sell any security. Investment decisions and their consequences are your own.