The relationship between the stock price and the Purchasing Manager index (PMI)

The Purchasing Managers ' Index (Purchasing Manager's INDEX,PMI) is a composite index that, according to the internationally-accepted practice, consists of five diffusion indices i.e. New Order index (order), production index (production), employee index (employees), Supplier Delivery time index (short distribution), the main raw Material Inventory index (short inventory) weighted. Purchasing Manager index has become an important evaluation index of world economic operation and the barometer of world economic change, the establishment of China Purchasing Manager index (CFLP-PMI) has a positive effect on perfecting China's economy and world economic monitoring system.

The PMI index is calculated as follows: pmi= order x30%+ Production x25%+ employee x20%+ distribution x15%+ Inventory x10%

Purchasing Manager Index (PMI), which is the index of the monthly survey results of the enterprise purchasing manager, which covers the purchasing, production, circulation and other aspects of the enterprise, is one of the leading indices for the international monitoring of macroeconomic trend and has a strong forecast and early warning effect. PMI usually takes 50% as a dividing point for economic strength, withPMI above 50% reflecting manufacturing economic expansion and less than 50%, reflecting a contraction in the manufacturing economy .

The PMI is expressed as a percentage, often with 50% as the dividing point for economic strength: that is, when the index is above 50%, it is interpreted as a signal of economic expansion. When the index is below 50%, especially when it is very close to 40%, there are worries about depression. It is a very important secondary pointer in the leading indicator. The price of a stock is positively correlated with the index.

At present, the purchasing managers index is released monthly, which is divided into: about 23rd per month by HSBC's purchasing managers Index (one week in advance), and around 1th monthly by the National Bureau of China purchasing managers Index .

The relationship between the stock price and the Purchasing Manager index (PMI)