The PMI (Purchasing Manager Index) indices are among the most-followed, and least understood, of ‘fast-twitch’ economic indicators. The PMI is a monthly opinion poll designed to gauge business activity. A sample of managers are asked the same questions: Do they think indicators like output, new orders, export orders, new business, employment, inventory positions, expectations are stronger, weaker, or the same as in the month before? Just three answers are possible.
The PMI formula then multiplies the number of positive answers by one, and adds that number to the number of ‘same’ answers multiplied by 0.5, while negative answers are eliminated
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