U.S. Services Purchasing Managers' Index (PMI) 2021-2024
In October 2024, the value of the Service Purchasing Managers' Index in the United States stood at 56. An indicator of the economic health of the service sector, the Services Purchasing Managers' Index is based on four major indicators: business activity, new orders, employment, and supplier deliveries. An index value above 50 percent indicates a positive development in the service sector, whereas a value below 50 percent indicates a negative situation.
Purchasing Managers' Index
The Purchasing Manager's Index is a strong indicator of an economic sector's health. The PMI is based on a survey that is sent to more than 400 companies in 19 primary industries, which are weighted by their overall contribution to the nation's GDP. The industries are organized into economic sectors to construct a PMI relevant to each sector, such as construction being in the manufacturing sector. In 2021, the construction industry added 958.8 billion U.S. dollars to the Gross Domestic Product (GDP) of the United States. A high contribution to the GDP by an industry generally helps increase the value of the sector's PMI. As of April 2024, the manufacturing PMI indicated a negative situation at 49.2.
The Service Sector
The service sector, or tertiary sector, is the section of the economy that deals with the production of services rather than the production of goods or extraction of materials. Within the service sector are many industries such as banking and financial services, construction, education, transportation, hospitality, communication, real estate, information technology, legal services, and more. Unlike the Manufacturing PMI, the Service PMI is based on only four major indicators: business activity, new orders, employment, and supplier deliveries. As a sector that largely relies on human interaction, the service sector was particularly affected by the 2020 COVID-19 pandemic. However, the Services Employment Index, which shows the employment indicator of the Service PMI, was trending upwards over the summer months of 2022. As of March 2023 the SEI decreased to 51.3.
