The Ivey Purchasing Managers Index (PMI) is an economic index which measures the month to month variation in economic activity as indicated by a panel of purchasing managers from across Canada, and is prepared by the Richard Ivey School of Business at Western University.
The Ivey Purchasing Managers Index is often referred to as the Purchasing Managers Index/PMI.
The Institute for Supply Management (ISM), formerly known as NAPM, in the United States has published a similar index called "Report on Business" for about 70 years. The American index has proven to be a reliable and valuable indicator for those whose jobs or interests required an understanding of current economic activity.
The Ivey PMI is different in several respects from the Institute for Supply Management (ISM) indexes. The Ivey PMI is based on end of month data, covers the complete Canadian economy (including both public and private sectors), and is based on one question only: "Are your purchases (in dollars) higher, the same, or lower than the previous month?"
The US indexes cover manufacturing and services only and are based on mid-month data and factor in the responses to a combination of five questions. Both the Ivey PMI and the US index reflect month to month changes and use the 50 line as the critical reference.
The Richard Ivey School of Business at Western University was the first School in Canada to teach purchasing and supply management as a standard credit course in its curriculum. For over sixty years the School has taught and researched supply management.
Aware of the popularity of the American PMI and the need for a Canadian equivalent, Ivey launched the Ivey Purchasing Managers Index on December 7, 2000.
Professor Michiel R. Leenders, Professor Emeritus is in charge of the Ivey Purchasing Managers Index. Other members of the Ivey PMI team include: Beth Sinclair, Manager, and Fraser Johnson, the Leenders Purchasing Management Association of Canada Chair at the Richard Ivey School of Business.
The Ivey Purchasing Managers Index (PMI) is based on month to month changes in dollars of purchases. It is calculated by categorizing the survey responses into percentages of higher than, the same at, or lower than the previous month. The difference between the higher and lower percentages, either positive or negative, is divided by two. The resulting number is added to or subtracted from 50 to give the monthly index number.
An Ivey Purchasing Managers Index of 50 indicates no change from the previous month. An Ivey Purchasing Managers Index above 50 shows an increase while an index below 50 indicates a decrease.
Similar calculations are done for employment, inventories, supplier deliveries and prices. Three examples will show how the Ivey Purchasing Managers Index is calculated.
Example 1: Increase in purchases over previous month
Ivey PMI = 50 + (26-12)/2 = 57
Example 2: Same purchases as previous month
|Ivey PMI = 50 + (20-20)/2 = 50|
Example 3: Lower purchases than previous month
|Ivey PMI = 50 + (10-19)/2 = 45.5|
- Seasonal adjustment is the estimation of the seasonal component, followed by its removal from time series data (US Census Bureau, 2010). The purpose of seasonally adjusting data is to produce a series which is more straightforward to: i) analyze at consecutive time intervals and ii) compare to the movements of other series.
- The United States Census Bureau’s X12-ARIMA Seasonal Adjustment Program was used to evaluate Ivey’s PMI and other data series. The X12-ARIMA programs incorporates the majority of the time series statistics and “is used for all official seasonal adjustments produced by the U. S. Census Bureau” (US Census Bureau, 2010). Additional information on this program, including some resources for new users, can be found by on the U.S. Census Bureau website.
The Ivey Purchasing Managers Index (PMI) is released on this website on the third or fourth working day of each month at 10:00 a.m. Eastern Standard Time.
Index Release Dates in 2012 are: January 5, February 6, March 6, April 5, May 4, June 7, July 6, Aug. 7, September 7, October 4, November 6, December 6.
Index Release Dates in 2013 are: January 7, February 6, March 6, April 5, May 6, June 6, July 5, August 7, September 6, October 4, November 6, December 5.
The Ivey Purchasing Managers Index when available can be accessed online through its website (http://iveypmi.uwo.ca/).
If you have additional questions about the Ivey Purchasing Managers Index (PMI) please contact Beth Sinclair or Professor Michiel R. Leenders at:
Richard Ivey School of Business
London, Ontario N6A 3K7