The purchasing managers’ index, PMI, for the manufacturing industry fell in July in Sweden as well as the USA, Germany and China.
The purchasing managers’ index, PMI, is a fast economic indicator where 50 indicates that the situation is the same as the previous month. A value above 50 indicates that the situation is better than the month before and a value below 50 that the situation is worse. In other words, the index shows change and not level.
The diagram above clearly shows how the PMI for Sweden fell sharply during the financial crisis in 2008 and then again during the corona crisis. The decline for the industry was very sharp in March and April 2020. After that there was a rapid rebound upwards. The same pattern could also be seen in the USA and in Germany. In China, the rise was not as steep, but the index has been close to 50 in 2021 and 2022.
The PMI for the service sector also shows a similar pattern, with sharp declines in the spring of 2020 and then a recovery phase in all countries. However, the Swedish decline was not as steep, which may be due to the fact that Sweden did not introduce as severe restrictions.
The PMI is based on a panel of purchasing managers who answer questions about order intake, business volume and production, employment, supplier delivery times and stock of purchased materials. The index has several strengths. For one thing, it is published faster than the actual production figures, which makes it forward-looking. Firstly, it is available for several countries, which enables international comparisons. This is particularly relevant for Sweden, whose foreign trade is extensive.