S&P Global European Union Manufacturing Purchasing Managers Index (PMI)

Markit Manufacturing PMI is an indicator of changes in business conditions in the eurozone's manufacturing sector in the specified month. The indicator is based on monthly surveys of purchasing managers working in private companies of the manufacturing sector.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's production activities. Purchasing managers are among the first to notice such changes. The sample for the survey is chosen so as to cover the maximum possible number of large companies across the country.

Purchasing managers complete a questionnaire, in which they assess the basic parameters of their work:

• Production output
• New orders
• Backlogs
• Prices paid (for materials, services and goods purchased in the production process)
• Prices received
• Suppliers' delivery times
• Inventories
• Employment
• Near-term productivity outlook

The survey participants provide relative estimates: whether figures have increased, decreased or remain unchanged. Individual subindexes are calculated based on these answers. These subindexes characterize inflation, employment and other key indicators of economic activity.

The index is seasonally adjusted. Individual weights are given to polled companies. Readings above 50 indicate that most of respondents positively characterize current business conditions. Readings below 50 mean worsening of business conditions.

PMI is one of the most popular indexes closely watched by analysts. It provides operational information covering the entire manufacturing sector. It is interpreted as a leading indicator of production and inflation. Manufacturing PMI growth is an indication of favorable market conditions and can be seen as positive for euro quotes.