Previous : 50.5
Forecast : 50.2
Definition : Is a widely used indicator in industrialized nations; measures the health of the manufacturing and the services sector. The diffusion index is compiled through a survey for purchasing managers covering a wide range of sectors.
The questionnaires cover basically five major indicators new orders, inventory levels, production, supplier deliveries, and employment environment.
The indicator is released in the United Kingdom, Germany, and the Euro Zone as well. Digesting the index generally a reading above 50 resembles expansion and below the marginal 50 level it resembles the opposite with is contraction.
Why is it useful?In General, the importance of the Purchasing Manager Index is considered significant, and appears obviously on currencies exchange market, so at the point when this index or any of its components show an increasing value, that will cause a rising of production quantity which is considered a basic factor to achieve required economic growth. Then the effect of this factor supports the country's currency pushing it to appreciate.
On the other hand and as result of this economic growth, inflation factor with time might increase under current economic conditions which accompanies growth, which starts to rise prices levels, which reduces the major utility of this economic improvement.
In order to confront price stability threats the government starts executing different monetary policies in purpose to stimulate and ensure robust economic growth levels.
The PMI has the same effect on Industrial companies' shares included in the stock market indices.
Previous : 50.5