What is the relationship between manufacturing PMI and business cycles?


In general, if the Purchase Managers' Index, PMI of manufacturing exceeds 50%, it means the economic cycle of manufacturing is in the expansion phase; if the PMI is lower than 50%, it means it is in the contraction phase. Although the current Taiwan PMI is limited by relatively shorter compilation time and an inadequate number of time series data, it is not yet possible to carry out rigorous quantitative analysis on PMI and overall economic indicators. As far as the present results are concerned, the PMI considerably reflects changes in economic cycles, thus making it an important piece of information for determining economic situations.

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