BREAKING DOWN 'Purchasing Managers' Index - PMI'.
· The ISM Manufacturing PMI is an important forward-looking indicator and has an impact on the EUR/USD. This is by no means investment advice. Forex Crunch will not accept liability for any formresume.ga · The US ISM Manufacturing PMI is published on Monday, July 2nd, at GMT. Brazil's game at the same time matters no less than the numbers. Investing in Forex involves a great deal of formresume.ga
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Or, read more articles on DailyFX. You are subscribed to Gregory McLeod. An error occurred submitting your form. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change.
The further from 50 is greater the level of change. The PMI is calculated as:. The PMI and relevant data produced monthly by the ISM from its surveys are critical decision-making tools for managers in a variety of roles.
An automobile manufacturer, for example, makes production decisions based on the new orders it expects from customers in future months. Those new orders drive management's purchasing decisions about dozens of component parts and raw materials, such as steel and plastic. Existing inventory balances also drive the amount of production the manufacturer needs to complete to fill new orders and to keep some inventory on hand at the end of the month. Suppliers also make decisions based on the PMI.
A parts supplier for a manufacturer follows the PMI to estimate the amount of future demand for its products. The supplier also wants to know how much inventory its customers have on hand, which also affects the amount of production its clients must generate. While most Americans are employed in service-sector jobs, manufacturing positions are of high importance, especially politically. Apart from the headline figure, the Price Paid component is also of high importance.
This indicator of inflation has been at record levels, reaching A small correction to The Federal Reserve follows this figure as part of its inflation gauges, and markets follow. In case the component drops towards 75 points, it would be a warning sign that inflation is losing steam.
If it reaches the round number of 80, it would add to rate hike expectations. The timing of the release is no less critical. The World Cup is played in Russia, and it has reached the Knockout stage. And while Americans have no interest in soccer football in the rest of the world , other countries care and they are still in play. European traders may be glued to their screens to see if Brazil, perhaps the most popular team in the world, can beat Mexico in the eighth-finals and advance to the quarter-finals.
The match begins at the same time:
So, a third consecutive beat in a top-tier figure cannot be ignored.
Most suppliers are willing and able to suppress cost increases.