Concept guide · Growth & Inflation
Purchasing Managers’ Index (PMI)
Understand business-survey diffusion indexes, the 50-point threshold and the difference from output growth.
What it measures
A Purchasing Managers’ Index summarises business survey responses about changes in activity. A reading above 50 generally indicates that more respondents report improvement than deterioration; it is not the percentage growth rate of output.
How to interpret it
Compare the composite with new orders, production, employment and prices-paid components. Check the geography, sector, seasonal treatment and provider. Rising prices diffusion does not mean consumer inflation is equal to that number.
Why markets care
The direction of reported business activity can inform growth expectations. Market reactions also depend on whether the inflation and policy implications differ from expectations.