Purchasing Managers Index
The Purchasing Managers Index (PMI ), also called " ISM Manufacturing Index " or " ISM purchasing managers 'index ', is the most important and most reliable leading indicator of economic activity in the United States. It is published by the Institute for Supply Management ( ISM), an American non-profit organization based in Tempe ( Arizona).
- 5.1 Historical Overview
- 5.2 Annual Development
Concept
The Purchasing Managers Index (PMI, and the ISM Manufacturing Index ) is a weighted index of five out of ten sub-indices (weights in parentheses): orders (30 percent), manufacturing (25 percent ), employment ( 20 percent), supplies received (15 percent ) and stock ( 10 percent). For each answer, the survey of the Report On Business provides the percentage that the net difference between the number of positive answers to the economy and the negative feedback, and the diffusion index ( sentiment indicator ).
The Business Survey Committee is in accordance with the Standard Industrial Classification (SIC ), the classification scheme for different types of industries, together contributing to the gross domestic product ( GDP) based on the proportion of each industry. In the Standard Industrial Classification twenty sectors from different geographical regions of the U.S. are represented.
Among the strengths of the current index includes information about the manufacturer activity, the selection of 20 manufacturing industries and the coupling of the index to changes in GDP. The weaknesses include the non-detection of the wage and salary component as well as technological changes or production efficiency. The limitation of the answers to three options ( slow, fast and unchanged ) is one of the criticisms.
The ISM Manufacturing Index ( ISM index for the manufacturing sector ) is an important and reliable leading indicator of economic activity in the United States. However, it must be taken into account, the 2011 was only 12.2 percent of gross domestic product, gross value added of the manufacturing sector in the United States. In March 2012, there were 132.8 million employed outside agriculture employs only 11.9 million in manufacturing. This sector has lost in GDP for decades meaning, which documented, among others, in the relocation of production abroad and the trade deficit.
Survey
Economic sectors
The survey is based on 20 different manufacturing sectors:
Food, tobacco, textiles, clothing, wood and wood products, furniture, paper, printing and publishing, chemical products, petroleum, rubber and plastic products, leather, glass, stones and aggregates, basic metals, fabricated metal products, industrial and commercial equipment and computers, components and electronic equipment, transport and equipment, Photographic equipment and machinery.
Other: jewelry, toys, sports equipment, musical instruments and others.
Topics
The purchasing managers of U.S. companies are currently being consulted on the following ten topics:
- Orders
- Backlog
- Order intake in the export
- Imports
- Production
- Deliveries received
- Stock
- Customer base
- Employment
- Prices
Seasonal adjustment
Many of the sub-indices have distinctive seasonal patterns that are due to seasonal weather conditions, social conditions and the different number of working days or holidays in each month. To assess economic trends seasonally adjusted indices are only meaningful. The seasonal adjustment of the Purchasing Managers Index is indirectly based on the Institute for Supply Management by the seasonal adjustment of the sub-indices. For the cleanup of the so-called time series seasonal factors are calculated for each month, which modify the respective original values to obtain the seasonally adjusted data.
Assessment
The Purchasing Managers Index (PMI ) shows the trend of U.S. industrial production. A value of 50 is considered neutral, a value of more than 50 points as a rising and a value of less than 50 points as a decline in industrial production. The index has on average a time before the actual industrial production from three to six months.
The financial markets are sensitive to unexpected changes in the index, it is perceived as an early indicator for economic development as well as looming inflation. PMI, Consumer Confidence Index and the University of Michigan Consumer Sentiment Index include also such as the Case-Shiller index, the FHFA House Price Index or the price of oil to the group of indicators that influence their development recognized the equity indices.
History
Historical Overview
The Institute for Supply Management ( ISM), an American non-profit organization based in Tempe ( Arizona ), published on the first working day of the Report On Business for the manufacturing industry in the U.S. with the Purchasing Managers Index (PMI ) as the core element. The report collects data from a survey of purchasing managers of 400 industrial enterprises and, apart from a break during the Second World War, published since 1931.
Today's principle of PMI was founded in 1982, developed by Theodore Torda, an economist with the U.S. Department of Commerce. Previously, the indicator has been published under the name of the NAPM index. In May 2001, the members of the company founded in 1915 national Purchasing Managers' Association decided NAPM ( National Association of Purchasing Management ) to change the name of the Association in the Institute for Supply Management ( Institute for Supply Management).
The all-time high of Purchasing Managers index was determined in July 1950 with 77.5 points. Values over 70 points scored, the index only in December 1972 with 70.5 points and 72.1 points in January 1973. In May 1980, the PMI marked with 29.4 points an all time low. Over the next recession from 1980 to 1982, the gross domestic product ( GDP) of the United States in 1982, the low point of the economic downturn, in real terms by 2.0 percent decreased (compared to 1932 GDP fell during the Great Depression in real terms by 13.0 percent). The U.S. unemployment rate in 1982 at 9.7 percent (1932 = 23.6 percent ) and the number of unemployed at 10.7 million (1932 = 12.1 million ).
Values of just over 30 points scored, the index in December 1974 with 30.9 points, 30.7 points in January 1975 and in June 1980 with 30.3 points. The economic recovery after the recession of 1990-1991, the index predicted two months in advance, the recovery from 1999 ( end of the Asian crisis ) four months ago. In December 2008, the Purchasing Managers Index fell 33.1 points to its lowest level since June 1980. Along with the recovery of the U.S. economy and the PMI rose. In January 2011 a value of 59.9 points was determined.
In November 2012, the Purchasing Managers Index fell 49.5 points to the level of July 2009. The barometer was the first time since August 2012 back below the growth threshold of 50 points. Called Fears of a collapse of the U.S. economy and the renewed slide into recession, even double-dip, increased.
Annual development
The data of the Purchasing Managers' Index are not corrected by the Institute for Supply Management's monthly. A revision is at the beginning of the year, usually performed for several years after the Ministry of Commerce of the United States has supported the seasonal adjustment. The following table shows the annual highs and lows of the back-calculated to 1948 PMI.
¹ December 31, 2012