PMI (Purchasing Managers’ Index) is a leading economic indicator measuring manufacturing and services sector activity based on surveys of purchasing managers. PMI readings above 50 indicate expansion while below 50 suggests contraction. PMI data significantly influences currency markets, bond prices, and commodity demand expectations as a forward-looking economic indicator.

PMI surveys assess new orders, production, employment, supplier deliveries, and inventory levels to create composite indices for different sectors and countries. Manufacturing PMI particularly affects commodity markets as it indicates industrial demand patterns. Understanding PMI trends helps predict economic cycles and commodity demand changes.

Real-world example: U.S. Manufacturing PMI rises to 55.8 from 52.1, indicating accelerating industrial activity that typically increases demand for industrial metals, causing copper and steel prices to rally on expectations of stronger consumption.