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Glossary/Macroeconomics/PMI
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Macroeconomics
2 min readUpdated Apr 2, 2026

PMI

Purchasing Managers IndexISM Manufacturing PMIISM Services PMIS&P Global PMIMarkit PMI

The Purchasing Managers Index — a monthly survey-based indicator tracking business activity in manufacturing or services, where above 50 signals expansion and below 50 signals contraction.

Current Macro RegimeSTAGFLATION→ DEEPENING

The macro regime is unambiguously STAGFLATION DEEPENING. The three-pillar structure remains intact and strengthening: (1) Energy-driven inflation shock — WTI at $104-111, +40% in 1M, flowing through PPI (+0.7% 3M, accelerating) into a CPI/PCE pipeline that has not yet absorbed the full pass-through,…

Analysis from Apr 3, 2026

What Is the PMI?

The PMI is a diffusion index based on monthly surveys of purchasing managers at hundreds of companies. Respondents indicate whether key metrics — new orders, output, employment, supplier deliveries, inventories — have improved, worsened, or stayed the same compared to the previous month.

The index is constructed so that 50 is the neutral level: above 50 = expansion, below 50 = contraction. The further from 50, the faster the pace of change.

Key PMI Surveys

Manufacturing PMI (ISM Manufacturing): Covers ~400 US manufacturing firms. Historically the most market-moving PMI. Below 47–48 sustained signals economic weakness.

Services PMI (ISM Services / NMI): The US economy is ~80% services, so this has become more important than manufacturing PMI. A sub-50 services reading is a serious warning sign.

S&P Global (formerly Markit) PMI: Flash estimates released mid-month, before the ISM surveys — useful as an early signal.

China Caixin PMI: Critical for commodity markets and global growth expectations. China's manufacturing sector is large enough to swing global materials demand.

Sub-Indices to Watch

  • New Orders: Leading indicator of future output — the most forward-looking sub-component
  • Prices Paid: Inflation signal from the supply chain
  • Employment: Labour market conditions in the sector
  • Supplier Deliveries: Slowing deliveries = supply chain stress = inflationary

Why PMIs Move Markets

PMIs are among the first indicators of the current month's economic health (surveys conducted in real time). They are leading indicators — they turn before GDP. A sudden PMI collapse, especially in both manufacturing and services, is one of the most reliable early recession signals.

Related Analysis
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Frequently Asked Questions

▶What PMI level signals a recession is coming?
ISM Manufacturing PMI readings sustained below 47–48 have historically coincided with industrial recessions, and readings below 43–44 have accompanied or immediately preceded economy-wide recessions. However, because the US economy is predominantly services-driven, traders should watch the ISM Services PMI equally closely — a decisive services PMI break below 50 is a more alarming recession signal than a comparable manufacturing slump.
▶What is the difference between ISM PMI and S&P Global (Markit) PMI?
The ISM surveys a panel of roughly 400 US companies and releases its Manufacturing and Services PMIs in the first week of the following month, making it the more market-moving of the two. S&P Global's PMI uses a larger international panel methodology and releases preliminary 'flash' estimates around the 22nd of the survey month — roughly a week earlier — giving traders an earlier, if slightly less definitive, signal on current-month economic momentum.
▶Why does the PMI sometimes give a misleading picture of the economy?
The supplier deliveries component is inverted — slower deliveries push the headline PMI higher — which caused the index to overstate manufacturing strength during the 2021–2022 supply chain crisis, masking the underlying inflation dynamic. Additionally, as a survey-based sentiment measure rather than hard data, the PMI is susceptible to one-month statistical noise, so traders should weight three-month moving averages and decompose sub-indices rather than reacting to headline prints in isolation.
Related Terms
CPIGDPNFP

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