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Purchasing Managers’ Index™ (PMI™) 101

Chris Williamson is the Chief Business Economist at IHS Markit. In this video, Williamson walks us through commonly asked Purchasing Managers’ Index® (PMI®) questions and helps us understand the impact the PMI index has in everyday business decisions.

The ability to accurately predict changes in key economic indicators, such as GDP, is an essential component of the decision-making process for a wide number of groups. By building confidence in the likely direction of the economy, policymakers are able to optimize changes to key macroeconomic management levers such as interest rates or fiscal policy. Likewise, armed with sound knowledge of current macroeconomic performance, investors and businesses can make investment allocation decisions with greater clarity and certainty.

In recent years, increasing attention amongst practitioners has been to improve their understanding of economic performance in near ‘real-time’, rather than waiting for updates to slowly produced official figures such as GDP, numbers for which are also subject to notable future revision. Performing such a forecasting task (often referred to as nowcasting) requires the use of high-frequency datasets that are released in a timely fashion. Chris Williamson, Chief Business Economist at IHS Markit, discusses the value of using the IHS Markit PMI as the ultimate nowcasting tool.

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