Purchasing Managers’ Purchasing Managers’ Index Index September 2001 ~ April 2002 September 2001 ~ April 2002 Hong Kong Institute of Vocati Hong Kong Institute of Vocati onal Education (Sha Tin Camp onal Education (Sha Tin Camp us) ~ us) ~ HD in Purchasing and Supply M HD in Purchasing and Supply M anagement anagement
Purchasing Managers ’ Index. September 2001 ~ April 2002 Hong Kong Institute of Vocational Education (Sha Tin Campus) ~ HD in Purchasing and Supply Management. Purchasing Managers ’ Index. Presented by: Mak Mei Ngo, Candy Tang Pik Shan, Angella Tang Yin Yee, Kay Wong Yu Ping, Tammy - PowerPoint PPT Presentation
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ContentsContents PMI’s DefinitionPMI’s Definition Importance of PMIImportance of PMI Generation of PMIGeneration of PMI Strengths and Weaknesses of PMIStrengths and Weaknesses of PMI HK PMIHK PMI Awareness of PMI in Purchasing FieldAwareness of PMI in Purchasing Field Awareness of PMI among Tertiary Awareness of PMI among Tertiary
PMI’s Definition (con’t)PMI’s Definition (con’t) Each months, hundreds of purchasing Each months, hundreds of purchasing
managers are asked about their managers are asked about their companies’ performance in the companies’ performance in the current month compared with the current month compared with the prior monthprior month
PMI’s reading over 50 % indicates PMI’s reading over 50 % indicates expansion, sub-50% reading expansion, sub-50% reading indicates contraction relative to the indicates contraction relative to the prior monthprior month
Importance of PMIImportance of PMI Immense recognitionImmense recognition
– Extremely important indicator for Extremely important indicator for financial marketsfinancial markets
– Great recognition from economists Great recognition from economists and forecasters in government and and forecasters in government and businessbusiness
Predict the trend of GDPPredict the trend of GDP
Generation of PMI Generation of PMI Collecting data:Collecting data:
– Based on month-to-month changes Based on month-to-month changes of purchasesof purchases
– Survey responsesSurvey responses ““higher than”higher than” ““the same as”the same as” ““lower than”lower than”
Generation of PMI Generation of PMI (con’t)(con’t) Calculation method:Calculation method:
– ““Higher than” X 1Higher than” X 1– ““The same as” X 0.5The same as” X 0.5– ““Lower than” X 0Lower than” X 0– Percent of positive responses plus Percent of positive responses plus
one-half of those responding the one-half of those responding the samesame
– Diffusion index for each of the 5 Diffusion index for each of the 5 factors is producedfactors is produced
Generation of PMI Generation of PMI (con’t)(con’t) Example: New OrderExample: New Order Survey responses:Survey responses:
Calculation : (20% X 1)+ (50% X 0.5) Calculation : (20% X 1)+ (50% X 0.5) =45%=45%
Same calculation for each of 5 factorsSame calculation for each of 5 factors
Generation of PMI Generation of PMI (con’t)(con’t)
New order X 0.3New order X 0.3Output X 0.25Output X 0.25Employment X 0.2Employment X 0.2Supplier’s delivery times X 0.15Supplier’s delivery times X 0.15
++Inventories X 0.1Inventories X 0.1------------------------------------------------------------------------------= PMI= PMI
0
20
40
60
80
ISM PMIISM PMI
Analysis of PMIAnalysis of PMI
Reading above 50%:Reading above 50%:
– manufacturing economy is manufacturing economy is
expandingexpanding
Reading below 50%:Reading below 50%:
– manufacturing economy is decliningmanufacturing economy is declining
Strengths of PMIStrengths of PMI Based on fact not opinionBased on fact not opinion
– Actual happen and base on the real Actual happen and base on the real situation to compare the last month situation to compare the last month indexindex
TimelinessTimeliness– The data is released the first The data is released the first
business day after the end of the business day after the end of the monthmonth
Strengths of PMI Strengths of PMI (con’t)(con’t) No revisionNo revision
– No revision are ever made to the No revision are ever made to the
raw data after publicationraw data after publication
ComparableComparable– Can be compared worldwide easily Can be compared worldwide easily
because of the same calculation because of the same calculation
methodmethod
Weaknesses of PMIWeaknesses of PMI
Answers too generalAnswers too general– Responses on the index limited to Responses on the index limited to
three options : three options : ““higher than”higher than”
““the same as”the same as”
““lower than”lower than”
HK PMIHK PMI
Development of HK Development of HK PMIPMI Conducted by NTC Research in Conducted by NTC Research in
association with CIPS association with CIPS First public released at 10:30 a.m. First public released at 10:30 a.m. on 3on 3rdrd October 2001 October 2001 Cover the whole economyCover the whole economy
– manufacturing at 5.8 %manufacturing at 5.8 %– construction at 5.8 %construction at 5.8 %– retail at 22.6 % retail at 22.6 % – services at 62.8 % services at 62.8 %
Development of HK Development of HK PMIPMI Size of panel members: about 250 Size of panel members: about 250
companies companies Data is collected by phone, fax or e-Data is collected by phone, fax or e-
mail mail Apply the same calculation method Apply the same calculation method
as ISM PMI as ISM PMI
Analysis of HK PMIAnalysis of HK PMI
The difficulties for The difficulties for launching HK PMIlaunching HK PMI Profile of HK economyProfile of HK economy
– Solution: measuring the whole economySolution: measuring the whole economy Language differenceLanguage difference Time differenceTime difference
– Solution: appointing a HK research Solution: appointing a HK research company to collect datacompany to collect data
Low response rateLow response rate– Solution: sending the reminders to non- Solution: sending the reminders to non-
responding panel membersresponding panel members
PMI in other countriesPMI in other countriesCountry
Launching Date
US 1948
UK 1991
Canada 1993
Switzerland 1995
Germany 1996
Italy 1997
France 1997
Ireland 1998
Austria 1998
CountryLaunching
Date
Singapore 1999
Russia 1999
Greece 2001
HK 2001
Netherlands 2001
Japan 2002
Spain 2002
Czech Republic
2002
China Soon
Awareness of PMI in Awareness of PMI in purchasing fieldpurchasing fieldNo. of questionnaires No. of questionnaires distributeddistributed 300300
No. of questionnaires No. of questionnaires receivedreceived 205205
成報成報Sing Pao Daily NewsSing Pao Daily News √√ √√ √√ √√ √√ √√ √√
星島日報星島日報Sing Tao Daily Sing Tao Daily √√
太陽報太陽報The Sun The Sun 明報明報Ming PaoMing Pao √√ √√
信報 信報 √√ √√ √√ √√
經濟日報 經濟日報 √√ √√South China Morning Post South China Morning Post √√ √√ √√ √√ √√
HK iMail HK iMail √√ √√ √√ √√
Key: √ = News related to HK PMI
ConclusionsConclusions Predict the trend of GDP for a placePredict the trend of GDP for a place
Determine the opportunities and Determine the opportunities and threats of the countrythreats of the country
Both tertiary students and people Both tertiary students and people who are working in purchasing field who are working in purchasing field are not familiar with PMIare not familiar with PMI
RecommendationsRecommendations Putting more effort on promotionPutting more effort on promotion