What Is PMI?
The Purchasing Managers Index (PMI) is a monthly survey-based indicator of economic activity in the manufacturing and services sectors. It's produced by S&P Global (formerly IHS Markit) and ISM in the US, and covers over 40 countries globally.
The survey asks purchasing managers at companies whether conditions are better, the same, or worse than the previous month across five dimensions: new orders, production, employment, supplier delivery times, and inventory levels. Each dimension is weighted and combined into a single number.
The key level is 50: above 50 signals expansion, below 50 signals contraction. The rate of change matters too — a PMI rising from 48 to 49 is more bullish than one falling from 55 to 53.
Why PMI Is a Leading Indicator
PMI matters for cyclical investors because it's one of the few genuinely forward-looking economic indicators. Purchasing managers make decisions about orders and inventory before the production and revenue data appears in official statistics. This means PMI typically turns before GDP growth does — giving investors an early signal of where the economy is heading.
Historically, the global manufacturing PMI has led industrial commodity demand (and therefore shipping volumes, energy demand, and materials consumption) by approximately 2–6 months.
PMI Levels and Cyclical Investment Signals
| PMI Level / Direction | Signal for Cyclicals |
|---|---|
| Below 45 and falling | CAUTION — recession risk |
| Below 47 and stabilising | Watch for trough — early positioning opportunity |
| 47–50 and rising | Early recovery signal — begin building positions |
| 50–55 and rising | Recovery confirmed — hold cyclical positions |
| Above 57 and plateauing | Late cycle — begin monitoring for peak signals |
Which PMI to Watch for Each Sector
- Shipping (dry bulk): China manufacturing PMI — the most important single indicator, as Chinese steel and construction demand drives Capesize rates
- Energy: Global composite PMI — broad industrial activity drives oil demand
- Materials (aluminium): Global manufacturing PMI + China PMI — aluminium is used in construction, automotive, and packaging
- Offshore: Oil company capex decisions, which lag PMI by 12–18 months
S&P Global publishes PMI data on spglobal.com/marketintelligence. The US ISM Manufacturing PMI is published at ismworld.org. Both are released on the first business day of each month for the prior month. TradingView tracks global PMI data under "PMI" search.
Get cycle signals before they peak.
Signycle monitors all of these indicators automatically and alerts you when the data says it's time to act.