au Jibun Bank Japan Composite Purchasing Managers Index (PMI)

Markit Composite PMI is a monthly summary report concerning the changes in the working conditions of private companies in the manufacturing and service sectors. The indicator is based on monthly surveys of purchasing managers working in Japanese private companies.

Purchasing managers can sometimes track changes in market conditions earlier than other company employees, since purchases precede a company's production activity, so those among the first to notice the changes are those responsible of purchases. 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: input and output prices, employment, production, new orders, etc. Survey participants provide relative estimates, that is, if the data is up, or if the data is down or if the data remains the same. Individual subindexes are calculated based on these answers. These subindexes characterize inflation, employment and other key indicators of economic activity.

Each response is weighted according to the size of a company and its contribution to the total production or services of the subsector it belongs to. Thus, the largest companies make a greater contribution to the indicator calculation.

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.

Markit Composite PMI is one of the most popular indexes closely watched by analysts. It provides operational information covering business activity in the entire private sector in Japan. It is interpreted as a leading indicator of production and inflation. PMI growth is an indication of favorable changes in market conditions and can be seen as positive for the Japanese yen.