Purchasing Managers Index - PMI
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Definition of 'Purchasing Managers Index - PMI'
An indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
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Investopedia explains 'Purchasing Managers Index - PMI'
A PMI of more than 50 represents expansion of the manufacturing sector, compared to the previous month. A reading under 50 represents a contraction, while a reading at 50 indicates no change. Prior to September 1, 2001, the acronym (PMI) stood for Purchasing Managers' Index. The Institute of Supply Management (ISM) now uses only the acronym, PMI. Although the ISM publishes several indexes, the PMI is the most widely followed and is sometimes referred to as the ISM index.
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A company's efficiency, financial strength and cash-flow health show in its management of working capital.
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The Purchasing Managers Index is a very important sentiment reading, not only for manufacturing, but also the economy as a whole.
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