Even as manufacturing is shrinking in high GDP per capita countries, it’s still considered a good forecasting metric for impending recessions and expansions. To figure out how it’s going in a day in the life of manufacturing, we have the Purchasing Managers' Index (PMI). While there are other indexes out there, economists, business peeps, and investors all watch PMI like hawks. (To be clear: this PMI has nothing to do with the mortgage PMI, which is private mortgage insurance.)
The Purchasing Managers' Index is a monthly report created by the Institute for Supply Management. They send out surveys to manufacturers in over a dozen industries. These dudes report back on production and employment levels, inventories and new orders, etc.
In its most simplistic form, each report provides a single number. A PMI of 50 means it’s looking pretty balanced...the good is balancing out the bad, compared to last month. Under 50 means there are more firms hurting than there are doing well. Higher than 50 means more firms are doing well than doing poorly.
