What is the Purchasing Managers Index - Manufacturing and Services sectors?
The Purchasing Managers’ Index, or the PMI, is an index which is based on a survey for two separate sectors. The PMI will have a report based on a study completed by 800 Purchasing Managers from the Services Sector and separate information completed by purchasing managers from the manufacturing sector.
The survey will be completed based on new orders, inventory levels, production, supplies and employment. If the PMI figure is above 50.00, it indicates economic growth is likely. A figure below 50.00 shows an economic contraction is likely. The PMI can affect both the currency and stocks within the country.
Why is it important to the currency?
The PMI data can affect the currency as it indicates the economic conduction and can also affect the monetary policy. The currency may be positively influenced if the figure is above 50.00 and higher than the market’s previous expectation. If the figure is lower than expectations, the money may be pressured.
Why is it important to the Stocks?
A higher-than-expected PMI report can positively affect the stock market as long as it is not increasing the chances of higher interest rates. A lower-than-expected PMI report will negatively affect the stock market unless it is likely to make the monetary more attractive for the stock market.