PMI Philippines

The Purchasing Managers’ Index (PMI) is a “nowcasting’’ tool designed to estimate economic trends and complement standard economic indicators (such as Gross Domestic Product) that require three to six months to finalize. It is a response to the need of economic policy makers and business decision makers for timely, high-quality, internationally compatible economic data for planning and decision making.
Specifically, it is an index which measures the monthly economic performance of the Philippine Economy through three indices: Manufacturing, Retail and Wholesale and Services.
The PMI for Manufacturing is a composite index generated from five key tracking indicators – New Orders, Production, Employment, Supplier Deliveries and Inventories. For Retail and Wholesale, the key indicators are – Purchases, Sales Revenues, Employment, Supplier Deliveries and Inventories. For Services Sector, the key tracking indicators are – Business Activities, New Orders, Outstanding Business, Average Price Charge, Average Operating Cost and Employment.

Brief History

It started from the initiative of then US President Herbert Clark Hoover. It was during the “Great Depression” when President Hoover sought for available economic data to know the status of the US Economy that time. He later found that there were no existing data on the US economy. Thus, the Purchasing Managers’ Index or PMI was originally developed by the Institute for Supply Management North America in 1931 to resolve this concern.
There are currently 32 countries worldwide where executives benefit from the on-time delivery of PMI results. Philippines is among the 32 countries in the world (six countries in Asia) regularly conducting the PMI. Other Asian countries conducting the PMI are Japan, China, Hong Kong, Singapore and India. PMI Philippines started in July 2008.
PMI Philippines is conducted by the Philippine Institute for Supply Management (PISM) through its advocacy arm Society of Fellows in Supply Management (SOFSM) and in partnership with I-Metrics Asia-Pacific. PMI is based on monthly interviews with a sample of 700 respondents drawn from a panel of 1,000 purchasing/supply chain managers. The panel of 1,000 executives was systematically drawn from among the top 10,000 manufacturing firms.
The initial PMI survey covered only the manufacturing sector; the rationale being that the industry influences the conditions in the economy. However, the growing contribution of the retail and wholesale, and services industries to total output in a country made it necessary to cover for these sectors as well.

Methodology

The PMI is produced very rapidly with results released on a monthly basis covering important private sector economic activities. It is never revised and acts as a reliable and accurate indicator of official data that are subsequently published. It is also produced using the same methodologies around the world. As a leading indicator, it tracks actual events rather than business confidence or expectations.