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Purchasing Managers ’ Index

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

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Purchasing Managers ’ Index

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  1. Purchasing Managers’ Index September 2001 ~ April 2002 Hong Kong Institute of Vocational Education (Sha Tin Campus) ~ HD in Purchasing and Supply Management

  2. Purchasing Managers’ Index Presented by: Mak Mei Ngo, Candy Tang Pik Shan, Angella Tang Yin Yee, Kay Wong Yu Ping, Tammy Yung Chau Shun, Stephanie

  3. Contents • PMI’s Definition • Importance of PMI • Generation of PMI • Strengths and Weaknesses of PMI • HK PMI • Awareness of PMI in Purchasing Field • Awareness of PMI among Tertiary Students • Conclusions • Recommendations

  4. PMI’s Definition • Originated in America since 1948’s • Held by Institute for Supply Management (ISM), formerly NAPM • Is a composite index, which includes:

  5. PMI’s Definition (con’t) • Each months, hundreds of purchasing managers are asked about their companies’ performance in the current month compared with the prior month • PMI’s reading over 50 % indicates expansion, sub-50% reading indicates contraction relative to the prior month

  6. Importance of PMI • Immense recognition • Extremely important indicator for financial markets • Great recognition from economists and forecasters in government and business • Predict the trend of GDP

  7. Generation of PMI • Collecting data: • Based on month-to-month changes of purchases • Survey responses • “higher than” • “the same as” • “lower than”

  8. Generation of PMI (con’t) • Calculation method: • “Higher than” X 1 • “The same as” X 0.5 • “Lower than” X 0 • Percent of positive responses plus one-half of those responding the same • Diffusion index for each of the 5 factors is produced

  9. Generation of PMI (con’t) • Example: New Order • Survey responses: • Higher: 20% • Same: 50% • Lower: 30% • Calculation : (20% X 1)+ (50% X 0.5) =45% • Same calculation for each of 5 factors

  10. Generation of PMI (con’t) New order X 0.3 Output X 0.25 Employment X 0.2 Supplier’s delivery times X 0.15 + Inventories X 0.1 --------------------------------------- = PMI

  11. ISM PMI

  12. Analysis of PMI • Reading above 50%: • manufacturing economy is expanding • Reading below 50%: • manufacturing economy is declining

  13. Strengths of PMI • Based on fact not opinion • Actual happen and base on the real situation to compare the last month index • Timeliness • The data is released the first business day after the end of the month

  14. Strengths of PMI (con’t) • No revision • No revision are ever made to the raw data after publication • Comparable • Can be compared worldwide easily because of the same calculation method

  15. Weaknesses of PMI • Answers too general • Responses on the index limited to three options : • “higher than” • “the same as” • “lower than”

  16. HK PMI

  17. Development of HK PMI • Conducted by NTC Research in association with CIPS • First public released at 10:30 a.m. on 3rd October 2001 • Cover the whole economy • manufacturing at 5.8 % • construction at 5.8 % • retail at 22.6 % • services at 62.8 %

  18. Development of HK PMI • Size of panel members: about 250 companies • Data is collected by phone, fax or e-mail • Apply the same calculation method as ISM PMI

  19. Analysis of HK PMI

  20. The difficulties for launching HK PMI • Profile of HK economy • Solution: measuring the whole economy • Language difference • Time difference • Solution: appointing a HK research company to collect data • Low response rate • Solution: sending the reminders to non- responding panel members

  21. Country Country Launching Date LaunchingDate US Singapore 1948 1999 Russia UK 1991 1999 Greece Canada 2001 1993 HK Switzerland 2001 1995 Germany 1996 Netherlands 2001 Italy 1997 Japan 2002 France 1997 Spain 2002 Ireland 1998 CzechRepublic 2002 Austria 1998 China Soon PMI in other countries

  22. Awareness of PMI in purchasing field

  23. Findings in purchasing field

  24. Channel of knowing PMI in purchasing field

  25. Awareness of launching HK PMI in purchasing field

  26. Awareness of PMI among HK tertiary students

  27. Findings among HK tertiary students

  28. Channel of knowing PMI among HK tertiary students

  29. Awareness of launching HK PMI among HK tertiary students

  30. Key: √ = News related to HK PMI

  31. Conclusions • Predict the trend of GDP for a place • Determine the opportunities and threats of the country • Both tertiary students and people who are working in purchasing field are not familiar with PMI

  32. Recommendations • Putting more effort on promotion • Seminars • Exhibitions • TV Programmes • Press conference • Press release • Lobbying

  33. Bibliographies • http://www.napm.org • http://www.napm.rog/nampreport/overviewofPMI.cfm • http://www.ism.ws • http://www.ntc-research.com • http://thestreet.com/tsc/basics/tscglossary/purchasingmanagersindex.html

  34. Bibliographies • http://thestreet.com/tsc/basics/tscglossary/chicagopurchasingmanagersindex.html • http://about.reuters.com/investormedia/news_releases/art_22-1-1998_id344.asp • http://iveypmi.uwo.ca/faq.html • http://www.sipmm.org.sg • http://hk-imail.com

  35. THE END

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