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Definition: Flash Manufacturing PMI
Purchasing Managers’ Indices (PMI) are those economic indicators that are derived from monthly (or periodical) surveys of private sector firms. They provide the future trends well in advance to the Government’s statistics and hence, are comparable and credible.
The Flash Manufacturing PMI is provided for a country and utilizes about 85% of the total PMI responses for surveys per month. The flash Manufacturing PMI is usually an accurate indicator of the economic situation of the private manufacturing sector.
PMI can be explained as a type of survey developed to track business conditions in the manufacturing sector. Now a day, it is also used for surveys done in the services, construction and other private sector companies.
The PMI is given by two groups, Markit Group and Institute for Supply Management (ISM), where Markit Group produces indices for more than 30 counties and ISM provides PMIs for US companies.
For example, the Markit Europe Sector PMI is derived from surveys of about 6500 companies in 11 countries such as Austria, Czech Republic, France, Germany, Italy, Ireland, Netherlands, Spain, Poland and United Kingdom. After the global PMI is announced every month, the Europe EMI is also released.
The PMI index is derived using surveys consisting of questionnaires about different variables i.e. Output, books, prices, inventories and employment.
This index is usually provided for 8 major industries namely, basic materials, consumer goods and services, healthcare, finance, industrials and technology. 26 Sub indices of these major groups are also provided.
- This index acts as a powerful tool for the business analysts and decision makers for monitoring the business cycles industry- wise
- Sector trends are tracked and relative performance between sectors can be determined and key growth indicators can be identified
-Comparison with Government released statistics to observe accuracy of the PMI index
The graph shows how the Flash Manufacturing PMI is closely related to GDP. The index varies between 0 and 100 with any value above 50 indicating economic growth. The greater the divergence from 50, the greater is the rate of change compared to the previous month.
The Flash Manufacturing PMI gives the estimate of 85% of the total PMI responses of different sectors every month.