Understanding PMI Data: What It Is, Key Global Releases, and Why Chinese PMI Matters Most
Purchasing Managers’ Index (PMI) data is one of the most watched economic indicators in forex and global markets. It’s a leading gauge of business health. Traders use it for clues on growth, inflation, and central bank policy. Volume price analysis (VPA) confirms reactions—high volume on moves post-PMI shows conviction.
New trading month sees the usual crop of PMI releases. China has already reported today we have the numbers from Italy, Spain and France as well as the UK.
Although UK economy is predominantly services based, the manufacturing number has been managing to hold above the key 50 level. From a technical perspective so far best move for GBP has been against the AUD with cable confined to a relatively tight range. However, we should start to see some movement once the PMI number has been released, and the new week gets under way.
Interestingly cable on the daily chart is sitting neatly between the 200 & 100 mas.
What Is PMI Data?
PMI surveys purchasing managers in manufacturing or services. They report if conditions are better, same, or worse than last month. Scores:
- Above 50 = expansion.
- Below 50 = contraction.
- At 50 = no change.
Sub-components (new orders, production, employment) give detail. Manufacturing PMI tracks factories. Services covers ~70-80% of developed economies. Composite blends both.
Flash (preliminary) releases come first. Final follows weeks later.
Most Important Countries and Release Schedule
PMI moves currencies sharply. Key releases (times approximate GMT, check calendars):
- China (Caixin Manufacturing): ~01:45 (first of month). Official NBS ~02:00.
- Australia/Japan: Early Asian session.
- Eurozone/Germany/France/UK: ~09:00-10:00 (flash mid-month, final early next).
- US (ISM Manufacturing): 15:00 first business day. Services mid-month.
China often first—sets Asian tone. Europe drives London open. US closes the cycle.
Why Chinese PMI Is Most Important
China is the world’s manufacturing hub. Its PMI signals global demand:
- Strong Caixin/Official = commodity currencies (AUD, CAD) up, risk-on.
- Weak = risk-off, safe-havens (JPY, USD) gain.
- Dual releases: Official (state firms), Caixin (private/SMEs)—divergence adds insight.
Chinese data influences oil, metals, AUD. VPA confirms—high volume reactions validate sentiment.
Trading PMI with VPA
Prepare with calendar. Wait for volume confirmation post-release. High volume moves = conviction. Low = traps. Quantum currency strength indicator ranks impacted currencies live.
PMI data reveals economic momentum. Chinese releases set global tone. VPA with Quantum tools turns fundamentals into disciplined trades.
Understanding US ISM PMI: Details and Market Impact
The US ISM Purchasing Managers’ Index (PMI) is one of the most influential economic indicators. Released by the Institute for Supply Management (ISM), it gauges business activity in manufacturing and services sectors. Traders watch it closely. Strong readings boost USD and risk assets. Weak figures pressure them. Volume price analysis (VPA) confirms reactions—high volume on moves shows conviction.
Two Main ISM Reports
- Manufacturing PMI: Covers factories. More market-moving historically.
- Services PMI (Non-Manufacturing): Larger sector (~80% of economy). Growing importance.
Both are diffusion indexes. Above 50 = expansion. Below 50 = contraction. At 50 = neutral.
How ISM PMI Is Calculated
ISM surveys ~400 purchasing managers monthly. Questions: Better, same, or worse than last month?
Sub-components (weighted):
- New Orders (30%)
- Production (25%)
- Employment (20%)
- Supplier Deliveries (15%)
- Inventories (10%)
Seasonally adjusted. Headline is composite score.
Release Schedule
- Manufacturing: First business day of month (10:00 AM ET / 15:00 GMT) for previous month.
- Services: Third business day.
No flash/preliminary—final only.
Market Impact and Trading Insights
Strong PMI (>50, beats forecast) signals growth—USD up, equities rise. Weak (<50 or miss) warns slowdown—USD down, risk-off.
VPA spots real reactions. High volume post-release validates direction. Low volume spikes = traps. Quantum currency strength indicator ranks USD live on data.
Anna Coulling’s VPA approach with Quantum tools turns ISM volatility into disciplined trades.
US ISM PMI reveals economic momentum. Manufacturing leads sentiment. Services confirms breadth. Watch volume for conviction.
By Anna Coulling