PMI
PMI (Purchasing Managers' Index) is a survey of purchasing managers on orders, output and hiring. A reading above 50 means activity is growing; below 50 means it is shrinking.
How it works
Companies are asked simple questions: are new orders, output and staff higher or lower than last month? The answers are combined into an index from 0 to 100. There are separate PMIs for manufacturing and services, and sometimes a composite.
PMI is valued for speed: it is released at the start of the month or even at the end of the current one (flash data), well before GDP. That is why it is seen as a leading indicator. In the US there are two well-known sets, ISM and S&P Global, and the eurozone and China have their own.
The direction matters as much as the level versus 50: a PMI of 48 after 45 is an improvement even though activity is still shrinking. As usual, markets react to the gap from the forecast. Price sub-indices in PMI surveys give an early hint about inflation.
The eurozone services PMI is forecast at 51.0 and comes in at 49.2. Activity unexpectedly slipped into contraction, markets price a softer ECB, and the euro often weakens: EUR/USD can drop a few dozen pips within minutes.
A common mistake is reading a PMI of 49 as the economy collapsing, or treating the index as a growth percentage. PMI is a survey about the direction of change, not its size. Compare the reading with 50, with last month and with the forecast, and do not draw conclusions from a single month.
Questions and answers
What is PMI in simple terms?
It is an index built from a survey of companies: if more say business is improving it is above 50, if more say it is worsening it is below 50.
What does a PMI below 50 mean?
It means activity in that sector is contracting compared with the previous month.
Why does PMI matter to traders?
It comes out earlier than most data and gives an early signal of where the economy is heading, and so of future central bank decisions.
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Updated: 2026-10-19