PMI surveys purchasing managers on new orders, production, and inventories. A reading above 50 signals expansion; below 50 signals contraction. Because it's based on forward-looking orders rather than backward-looking output, it tends to turn before GDP confirms a change in direction — manufacturing PMI typically leads the cycle, while services PMI reflects the larger share of developed economies.
Why it matters
- —It's released early in the month and reflects forward orders, making it one of the best leading indicators for spotting a cycle turn before GDP data confirms it.
- —Manufacturing PMI leads the broader cycle; services PMI carries more weight in developed economies where services dominate output.
- —A PMI crossing the 50 line in either direction is one of the cleanest, most-watched threshold signals in macro investing.
How to read it
| Above 50 and rising | Expansion accelerating |
| Above 50 but falling | Expansion decelerating — late-cycle signal |
| Below 50 | Contraction — economic activity shrinking |