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| Index | 57.3 | 54.5 |
Highlights
The Purchasing Managers Index for manufacturing rose to its highest level in more than three years in May, to 57.3 from 54.5 in April on a seasonally adjusted basis. That compares to a reading of 42.4 in May of last year.
Order books saw an increase of 3.3 points to 59.4, which was the biggest factor in the overall increase for the headline reading. At the same time, the reading for production increased from 52.3 to 57.3 in May.
The dynamic has become widespread where since the outbreak of the war in the Middle East, businesses have been frantically increasing orders and boosting production in order to stat ahead of additional price increases and supply chain problems.
Indeed, the measure for delivery times increased by 1.6 points to 65.7 after 64.1 in April, and the third consecutive month the reading was above 60.0. For comparison, the February result before hostilities began in earnest was at 53.4.
Prices continue to remain elevated relative to February but have seemingly stabilized. The Index for prices paid was 74.9 in May after 76.0 in April and 55.5 in February. Prices charged rose to 65.6 from 64.3 in April after coming in at 49.5 in February.
The main story continues to be the conflict in the Middle East, and with no sign of an immediate resolution, the theme is likely to continue.
Definition
The SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) Association for Purchasing and Supply Management's Purchasing Managers' Index (PMI) is produced in conjunction with Credit Suisse. The PMI provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector of purchasing managers. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).
Description
The PMI is very sensitive to the business cycle and tends to match growth or decline in the economy as a whole. To construct the PMI the Swiss Association of Purchasing and Materials Management conducts monthly surveys of purchasing executives on their performance in the current month versus the previous period. Because the amount of materials ordered by purchasing managers parallels the level of manufacturing production, the PMI is a gauge of production growth. The results are indexed with a centerline of 50; values above 50 indicate expectations of expansion and values below 50 indicate expectations of contraction for the manufacturing sector.