INVESTMENT UPDATE

Chart of the Month - PMI numbers

  • 13 December 2020
  • 5 mins reading time

Key economic indicator - PMI numbers

Data shown: the purchasing managers’ indices for manufacturing and non-manufacturing in the US over the past five years. Source: FactSet/ Schroders Personal Wealth, 7 December 2020

This is a chart of closely followed data that indicate sales numbers and confidence levels in different industrial sectors of the US. When the index is above 50, purchasing managers as a whole are reporting an increase in what they are buying i.e. sales and confidence are rising; below 50 indicates falling purchase numbers.

As the chart shows, there was an extremely sharp fall in index numbers as a result of the lockdowns in 2020. In the coming months, as we wait for the logistics of vaccine distribution to unfold, analysts are watching this sort of information to get an idea of the shape and speed of economic recovery. The numbers are comfortably above 50 in most recent reports, but the downward slope of both indices gives pause for thought over the short term.

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