When you decided to join and become a forex trader, learning about purchasing manager’s index is a must. It is an economic indicator which is formed by conducting a survey of a number of Purchasing Managers in various business sectors. 

The high index figure shows the optimism of these business sector players towards the future economic outlook. The one that investors and analysts pay the most attention to is for the manufacturing sector called the Manufacturing PMI index.

Meanwhile, the service sector called the Services PMI index. Almost all developed industrialized countries release this indicator from various survey agencies including major currency countries. 

In the UK, the Euro region and Japan, this indicator was released by the Markit Group. In the United States by the Institute for Supply Management (ISM) and the Markit Group.

How to Read the Purchasing Manager’s Index 

The PMI Index is considered by investors in this sector as a leading indicator for the overall state of the economy, in order to get an idea of sales results, labor wages, inventory, and price levels.

As a reference for the PMI index reading, the number 50.0 is used. If the number is above 50.0, it means that the sector surveyed is experiencing expansion (growth)

Meanwhile, if the purchasing Manager’s index figure is at 50.0, it means that the sector surveyed is experiencing a contraction (slowdown). In addition, the increase and decrease can also be interpreted by yourself.

If the decline continues, it can be concluded that the economy, especially the manufacturing sector, is experiencing a slowdown. This can be a good calculation to have. 

On the other hand, the increase number means that purchasing managers are optimistic about the future prospects of the manufacturing sector. This is as well as meaning that the economy is recovering or growing.

The Release Time 

The manufacturing purchasing manager’s index is generally released once a month at the beginning of each month. This month's data release will contain the results of the survey from last month. 

However, specifically for the Euro area there are two releases; Flash and Final. Flash is an estimate of the figures for the current month and is usually released in the 3rd week of the current month. 

In some other regions, Flash PMI is also called the Preliminary PMI index. The rise in the Manufacturing Purchasing Manager’s Index shows the optimism of manufacturing business people.

Thus it also attracting investors to enter this sector. In the stock market, in particular the prices of stocks of this sector, will tend to rise. 

Meanwhile, the country's currency exchange rate in the forex market will tend to rise due to positive sentiment on economic growth in the short term. The Employment component in the US PMI report reported by the ISM, is usually also used as a predictor for Non Farm Payroll.

Because the Non Farm Payroll (NFP) data has a very high impact on the forex market, the announcement of the purchasing manager’s index can affect the movement of the US Dollar ahead of the NFP release.

Always Watch the Updates 

Based on the description above, it is important for you to always updated the information. Reading articles and updates about that is a must. 

You can get it from the best forex broker because usually it also provides updates for it’s member. That will help them to decide the further actions to have. 

Didimax forex broker is an example where it is also equipped with the updated news. Besides that, you can get the complete facilities and all accesses to forex market. 

Didimax also has the competitive price and low spread which means that it is suitable for beginners to. Their withdrawal system is also super fast and this platform is legal. 

You should try by yourself and try Didimax from now. Join it for free to trade and maintain the updated purchasing Manager’s index every month.