The Short Answer: Yes

There are actually two things PMI can refer to. One is in the land of mortgages. And one is in the land of economics.

Economic Definition of PMI:

PMI = Purchasing Managers Index.

This index reading comes out the first business day of every month. “The Institute of Supply Management” aggregates that data.

PMI looks at things like a manufacturer’s: inventory, new orders and employment level.

Why do you care?

If manufacturing holds a smaller place in our economy than it used to, why care?

You care because PMI is an important gauge of the market’s sentiment. If people feel good- they are going to spend money on more than just U.S. Manufactured goods (services, etc.).

As an added bonus, oftentimes, the PMI data will signal when recessions are beginning and ending.

How do you know what a good PMI Number is?

They range between 0-100.

A reading above 50 is very good. A reading below 50 is not as good. However, if your long-term average is above 42, it generally means GDP is expanding.

Who watches this number?

Everyone in finance loves PMI.

Bond traders look to the number to see if there are any nascent signs of inflation or deflation. Stock traders look to it as a sign of corporate strength or weakness.

Mortgage Definition of PMI:

PMI= Private Mortgage Insurance

This is protection for lenders (the banks) against your potential inability to pay back a mortgage. If the mortgage looks to be riskier in the banks eyes, they may request some level of Private Mortgage Insurance. This will be bundled into the cost of the mortgage itself.

For more read: New Home: The Down Payment