S&P Global South Africa Purchasing Managers Index (PMI)

South African Markit Purchasing Manager Index (PMI) is an indicator of business conditions calculated by IHS Markit based on monthly surveys of purchasing managers from about 400 private sector 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 from all sectors, including agriculture, mining, manufacturing, construction, services, wholesale and retail trade.

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 subindices are calculated based on these answers. These subindices characterize inflation, employment and other key indicators of economic activity. The responses are collected in the second half of each month.

The final index is calculated by adding half the percentage of "unchanged" answers to the percentage of answers that evaluate the current level as "higher". 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 business activity in the entire private sector of South Africa. It is interpreted as a leading indicator of production and inflation. PMI growth indicates favorable market conditions and it can be seen as positive for the South African rand.