S&P Global/CIPS United Kingdom Services Purchasing Managers Index (PMI)
Markit/CIPS Service PMI is calculated by Markit together with the Chartered Institute of Procurement & Supply (CIPS). It characterizes business conditions and purchasing managers' activity level in the UK economy's service 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.
PMI calculation is based on data collected from monthly replies to questionnaires sent to purchasing executives in over 600 UK companies which provide the highest contribution to GDP. Managers are asked to characterize current business and economic conditions in the national construction sector. The questionnaire covers the following economic variables:
- Business activity
- New orders received
- Prices received for produced services
- Prices paid (for materials and services purchased in the production process)
- Near-term business activity
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 service sector. It is interpreted as a leading indicator of production and inflation. Service PMI growth is an indication of favorable market conditions and can be seen as positive for the pound sterling quotes.
The chart of the entire available history of the "S&P Global/CIPS United Kingdom Services Purchasing Managers Index (PMI)" macroeconomic indicator. The dashed line shows the forecast values of the economic indicator for the specified dates.
A significant deviation of a real value from a forecast one may cause a short-term strengthening or weakening of a national currency in the Forex market. The threshold values of the indicators signaling the approach of the critical state of the national (local) economy occupy a special place.
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