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The Purchasing Managers’ Index (PMI) is a monthly survey-based measure of whether business activity is improving or worsening. For its main activity indexes, a reading above 50 indicates that more respondents reported increases than decreases; below 50 indicates the reverse; and 50 means no net change. PMI is not a percentage growth rate: a reading of 55 does not mean output rose 5%.
What the PMI measures
PMI summarizes survey responses from businesses about changes in activity compared with the previous month. It is a diffusion index: it captures the breadth of reports of improvement, no change, or deterioration, rather than counting units produced or measuring the size of each change. The S&P Global PMI FAQ explains the index and its interpretation.
For common PMI activity measures, readings are expressed on a 0-to-100 scale. The 50-point threshold separates net reports of increases from net reports of decreases. The distance from 50 describes the balance and breadth of responses; it is not an equivalent percentage change in production, sales, or GDP.
How to interpret a PMI reading
- Above 50: More surveyed businesses reported an increase in the measured activity than a decrease.
- Below 50: More reported a decrease than an increase.
- At 50: Reports of increases and decreases are balanced, so there is no net change in the index’s terms.
These readings describe the survey’s measured activity and comparison period, not the entire economy. A contractionary reading is not by itself an official recession declaration, and an expansionary reading does not guarantee that activity will keep growing.
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“PMI” is not one universal survey. The Institute for Supply Management (ISM) publishes US manufacturing and services reports. S&P Global publishes manufacturing, services, construction, and composite surveys across multiple countries. Its methodology FAQ describes its panels and cross-country approach.
US readings from ISM and S&P Global can differ because the organizations use different survey coverage, respondent roles, and headline constructions. S&P Global’s June 2025 comparison says its US surveys cover about 70% of the economy, while ISM’s surveys collectively seek broader coverage; the services measures also differ in sector coverage and headline naming. Treating their headlines as identical measurements can therefore mislead. When comparing them, identify both publishers and what each series measures.
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ISM began using the collective branding “ISM PMI Reports” in its 2025 release cycle. The organization said the branding change did not alter its established diffusion-index methodology or the 50.0 interpretation threshold. Older material may use “Report On Business” terminology. See ISM’s 2025 branding announcement.
What can move a headline reading?
A headline is a composite, so its components can reveal whether the overall balance is being driven by orders, activity, jobs, or another measure. ISM’s manufacturing PMI draws on New Orders, Production, Employment, and Inventories. Its services composite combines Business Activity, New Orders, Employment, and Prices. Supplier Deliveries is reported separately and read in reverse: above 50 indicates slower deliveries. ISM’s December 2025 Services PMI methodology report describes these measures.
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Components may point in different directions. For example, stronger orders alongside weaker employment would make the headline less informative on its own about the range of business conditions. Read the component indexes before concluding what is driving the overall result.
A practical checklist for reading a release
- Identify the series. Note the publisher, country, sector, and release month; “PMI rose” is incomplete without them.
- Check the threshold. Establish whether the relevant activity index is above, below, or at 50.
- Inspect the components. Look for the measures behind the headline, such as orders, production or business activity, employment, inventories, prices, and deliveries.
- Look beyond one month. Compare the direction over several releases to distinguish a persistent pattern from a single monthly shift.
- Put it in context. For claims about the wider economy, compare PMI with official data and other indicators rather than treating one survey reading as a complete verdict.
Seasonal adjustment and revisions
Seasonal adjustment can affect published PMI series. ISM describes seasonal adjustment for eligible component indexes and publishes adjustment-factor information on its Seasonal Adjustment Factors page. Use the currently published series and note revisions when they matter to a comparison.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What PMI can—and cannot—tell you
PMI is useful because it provides a timely view of the direction and breadth of reported business changes. It is not a direct output count, a growth percentage, an official GDP measure, or a standalone forecast. Its meaning depends on the publisher, country, sector, index components, and trend. Use it as one piece of economic evidence, not as a substitute for those distinctions.
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