A monthly survey of purchasing managers, scaled so that above 50 means the sector expanded versus the prior month and below 50 means it contracted.
Published by Quintessentia Network Inc. · Updated 17 July 2026 · Sources & disclosures
Formula
Sub-index = %"higher" + 0.5 x %"same" (%"lower" weighted 0); headline PMI = weighted average of sub-indices
What it is
The Purchasing Managers Index is a monthly economic indicator built from a survey of the executives who buy supplies and materials for their companies. Each month they are asked whether things like new orders, production, employment, supplier delivery times and inventories are higher, the same, or lower than the previous month. Their answers are combined into a single number on a 0-to-100 scale, where 50 is the dividing line: above 50 signals expansion versus last month, below 50 signals contraction. Separate PMIs are published for manufacturing and for services, and they can point in different directions.
Why it matters
PMI asks people making real purchasing decisions right now, so it arrives faster than hard data like GDP, which is compiled with a lag and revised afterwards. That makes it one of the earliest readable signals of whether business activity is picking up or cooling. It is also a diffusion index, meaning it measures breadth, not size: it counts how many firms report improvement, not by how much. A reading of 52 says more firms reported improvement than deterioration versus the prior month; it does not say output grew 2%. A single month is noisy, and the direction over several months carries more information than any one print.
How it's calculated
PMI is a diffusion index. For each question, the share of respondents answering "higher" is added to half the share answering "the same" ("lower" gets zero weight), giving a 0-to-100 sub-index where 50 is balance and above 50 means more firms reported higher than lower. The headline is a weighted average of sub-indices - typically new orders, output, employment, supplier deliveries and inventories - then seasonally adjusted. Supplier deliveries is inverted: slower deliveries push the index up, since demand outrunning supply reads as expansion. S&P Global's "flash" is an early estimate from a subset of replies, superseded by a final print; ISM publishes one print a month.
Cross-border note. The US has two watched manufacturing surveys: the ISM Manufacturing PMI (longest-running) and the S&P Global US Manufacturing PMI. They use different panels and weightings and can disagree in a month. Canada's best-known domestic series, the Ivey PMI from the Ivey Business School, spans all sectors, not manufacturing alone, so it is not like-for-like with ISM. Like-for-like comparison uses S&P Global for both.
FAQ
Does a PMI below 50 mean a recession is coming?
No. Below 50 means more surveyed firms reported worse conditions than better ones versus the prior month - a contraction in that sector, that month, on that survey panel. Manufacturing PMI has dipped below 50 in periods where the wider economy kept growing, partly because manufacturing is only one part of a services-heavy economy. A recession is a broad, sustained downturn identified after the fact by official bodies, not by one survey reading.
Why do the manufacturing and services PMIs sometimes disagree?
They survey different panels about different businesses. Factories are sensitive to goods demand, inventories and global supply chains; services firms respond more to domestic consumer and business spending. Those cycles need not move together, so one can sit above 50 while the other is below. Services make up the larger share of activity in both Canada and the US, so the services PMI covers more of the economy - though manufacturing is often more cyclical.
If PMI falls from 55 to 52, is the economy shrinking?
No - a common misreading. Both numbers are above 50, so both months report expansion. The drop means growth was reported by a narrower group of firms than the month before: slower expansion, not contraction. PMI measures direction versus the prior month, and the level versus 50 separates growth from decline. A falling PMI that stays above 50 still describes an expanding sector.