Purchasing Managers' Index (PMI) Interpretation

The war in Middle East is impacting the Canadian economy. Canadian economic activity contracted in March 2026, after a three-month period of expansion, say the nation’s supply executives in the latest Ivey Purchasing Managers Index survey. Respondents also reported accelerating prices and longer supplier lead times as global supply chains are disrupted by the war. The seasonally adjusted Ivey PMI registered 49.7 in March, declining from the 56.6 registered in February. The corresponding figure for March 2025 was 51.3 and 57.5 for March 2024. It is worth noting that the seasonally adjusted Inventories Index declined to 49.4 from February’s reading of 57.2, likely contributing to the weaker PMI results. The Ivey PMI is a leading economic indicator. It has ranged between 47.9 and 59.8 in the last year, with a 12-month moving average of 52.1. A reading above 50.0 indicates that the Canadian economy is generally expanding, while a reading below 50.0 generally indicates that it is contracting. The seasonally adjusted Prices Index accelerated to 75.7 in March from the 63.4 registered in February, which is the highest level since July 2022 (75.9). By comparison, the 12-month moving average is 66.8. The March results reversed the seven-month trend where the Prices Index reading was below the 12-month moving average. The seasonally adjusted Prices Index was 75.6 in March 2025 and 57.9 in March 2024. The seasonally adjusted Employment Index increased modestly to 51.1 in March from 49.4 in February. The February results demonstrate continued softness in the Canadian labour market with 12-month moving average of 50.0. The seasonally adjusted Supplier Deliveries Index declined significantly from 45.2 in February to 38.8 in March, the lowest reading since June 2022 (37.5). The 12-month moving average for the Deliveries Index is 46.4. The seasonally adjusted Inventories Index decreased sharply from 57.2 in February to 49.4 March, which is below the 12-month moving average 51.5. The Ivey PMI is the most widely watched and utilized indicator of future economic activity in Canada. Panel members indicate whether their organization’s activity is higher than, the same as, or lower than the previous month across the following five categories: purchases, employment, inventories, supplier deliveries and prices. A figure above 50 shows an increase while below 50 shows a decrease. For information visit http://iveypmi.uwo.ca. Interested in joining the Ivey PMI Panel? Contact Professor Fraser Johnson at fjohnson@ivey.ca. Ivey Business School at Western University #PMI #CanadianEconomy #IveyBusiness

How reliable is PMI survey data in assessing global economic health? 🤔 Our latest analysis dives into the global composite PMI, which rose to 51.7 in June, signaling resilience amidst economic uncertainty. But beneath the headline figures lie important nuances that investors and policymakers should consider: 🔹 Manufacturing vs. Services: While the global manufacturing PMI rebounded to 50.3, marking its first expansion in three months, services PMIs continue to outperform globally, showing sectoral disparities in resilience. 🔹 Tariff Impacts: Trade policy uncertainty and tariffs are creating inflationary pressures in the US, influencing manufacturing trends through inventory swings and supply chain reconfigurations. 🔹 Hidden Stories: Qualitative survey responses, such as those from the US ISM manufacturing release, often paint a grimmer picture than headline indices suggest. 🔹 Cost Pressures: Input costs are rising faster than output costs in developed markets, squeezing margins, while emerging markets show moderated cost pressures. 🔹 Regional Trends: Services sectors in the UK, eurozone, and Asia remain robust, with India showing strong growth due to lower inflation and interest rates. Meanwhile, US services PMI growth has slowed, reflecting ongoing challenges. PMI data remain a valuable tool for assessing economic health due to their timeliness and comparability. However, its limitations—such as lack of magnitude measurement and inability to fully capture economic volatility—mean deeper component-level analysis is essential to uncover the full story. Explore our full report to understand what these trends mean for global economic dynamics: http://grp.hsbc/60424mFP6 #HSBCResearch #PMI #EconomicOutlook #GlobalTrends #Manufacturing #Services

India’s services PMI surged to 62.9 in August - the highest since 2010. PMI stands for Purchasing Managers’ Index. It’s a survey-based indicator where company managers are asked about new orders, hiring, exports, costs, etc. A score above 50 means expansion, below 50 means contraction. Think of it as a quick health check of the economy, based on what managers at the ground level are actually seeing. Why this matters: -Services account for ~55% of India’s GDP - IT, banking, hospitality, logistics, transport, consulting. -PMI above 60 is not routine. It means growth is broad-based and very strong. -Export demand for Indian services hit a one-year high, despite global slowdowns. -Services generate more jobs per rupee invested than manufacturing. So this is directly linked to employment momentum. But the timing is what makes this important. 👉While other data (credit growth, vehicle sales, rural demand) points to slowing consumption, services are quietly carrying the economy. 👉Historically, India’s services cushion has been our safety net - during 2008, and again during Covid. Today, once more, it is the silent growth engine. Implications: -For policymakers, this challenges the idea that India’s $5 trillion journey must be factory-led. The offices may get us there first. -For investors, it signals resilience in IT, fintech, logistics, and even hospitality stocks. -For workers, the jobs of the next 5 years may not come from assembly lines but from service roles. 📌 The question is this: Can India replicate China’s dominance in manufacturing with its own dominance in services exports? Or does overdependence on services make us vulnerable to the next global downturn?

Good news for Egypt emerged in the latest PMI reading, with the headline index rising to 51.1 in November from 49.2 in October—its first expansion since February and the strongest level since October 2020. The improvement was supported by renewed growth in both activity and new sales, signalling a notable uplift in non-oil private sector operating conditions. Nevertheless, a deeper look into the sub-components provides a more nuanced assessment of underlying economic dynamics. The PMI results reveal a clear divergence between external and domestic demand. Export-oriented sectors—particularly manufacturing and key service activities—recorded solid increases in new orders and output, reflecting a strengthening in foreign demand conditions. By contrast, wholesale and retail, which rely almost entirely on domestic household spending, remained the only sector to register a decline. This sectoral split indicates that while external demand is gaining momentum, domestic consumption continues to be weighed down by tight financial conditions, subdued real incomes, and persistent inflationary pressures (stagnant). As such, the overall improvement in the headline PMI appears to be driven primarily by external rather than internal demand. Price dynamics also offer important context. Input cost inflation eased to an eight-month low in November, with firms widely noting that a stronger pound against the US dollar helped reduce import-related expenses. However, wage costs continued to climb, keeping underlying cost pressures elevated. The fact that wage growth persists while wholesale and retail activity remains weak suggests that these wage gains are predominantly nominal rather than real. With household purchasing power still strained and domestic demand subdued, there is little evidence of demand-driven inflation or meaningful improvements in real wages. Consequently, Egypt’s inflation profile remains heavily cost-push in nature. This dynamic is particularly significant given the structure of domestic consumption, which is largely driven by lower-middle, working-class, and middle-income households—groups that remain the most exposed to economic challenges and erosions in real income. While the headline PMI provides an encouraging signal of improving business conditions, it also underscores the continued vulnerability of domestic demand and highlights that a more broad-based recovery will require sustained improvements in real household purchasing power.

A rebound in the PMIs: Confirmation of the improvement in earnings estimates is coming from last week’s rebound in the purchasing managers index (PMI).  This bodes well for earnings, given the strong correlation to estimates. The ISM index (Institute for Supply Management) has rebounded to an almost expansionary 49.1, while new orders are now expanding again (above 50). A hopeful sign for the earnings cycle. The chart below of global PMIs shows that in terms of duration (if not magnitude) the current rebound is in line with history, especially during soft landings. The business cycle has apparently not been completely repudiated.