PMI needs to become a decision-making tool: MCCI chief

The Bangladesh Purchasing Managers’ Index (PMI) needs to move beyond being a monthly economic report and become a tool that businesses and policymakers regularly use to make decisions, said Metropolitan Chamber of Commerce and Industry (MCCI) President Kamran T Rahman.

“The PMI will become truly sustainable only when it is regularly used,” he said at a discussion session on “Bangladesh PMI: Institutional Transition and the Way Forward”, organised by MCCI in collaboration with Policy Exchange Bangladesh (PEB).

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He said companies should be able to use PMI findings for business planning, procurement, inventory management, investment decisions and market assessment. Banks and financial institutions could use the index to assess sectoral momentum, while policymakers could use it as an early signal when considering economic and sectoral measures.

The larger challenge is not simply producing another economic indicator, but ensuring that timely and sufficiently detailed information reaches those making economic decisions, he added.

Responsibility for the Bangladesh PMI is now being transferred to MCCI and PEB after more than two years of support from the UK government’s Foreign, Commonwealth & Development Office (FCDO) and technical assistance from the Singapore Institute of Purchasing and Materials Management (SIPMM).

The call for wider use of the index comes as businesses and policymakers often have to make decisions before a clear picture of economic conditions becomes available.

A press release issued yesterday said greater use of timely business surveys such as the PMI could help narrow that information gap.

EARLY ECONOMIC SIGNALS

The PMI is a monthly score showing whether businesses across the economy are growing or shrinking. A score above 50 signals growth, while a score below 50 signals contraction, with the distance from 50 indicating the pace.

For example, the index fell 9.9 points to 52.9 in June from May, although the reading remained above 50, indicating an expansion in business activity.

The decline was attributed to the extended Eid holiday, the start of the monsoon, weaker pre-Eid demand and the introduction of a new 15 percent VAT, according to the release.

Such movements show how the PMI can capture changes in business conditions relatively quickly.

The index is based on a monthly survey of 400 businesses across agriculture, manufacturing, construction and services. It tracks new orders, production, employment, input costs, supplier deliveries, inventories and outstanding orders, among other indicators.

Unlike GDP and some other official statistics, which can take time to compile, the PMI is published by the seventh day of each month and provides an early indication of changes in economic activity.

It is not intended to replace official statistics. Rather, it can provide an early signal of whether demand is weakening, production is picking up, costs are rising or supply pressures are building.

The index has responded sharply to major disruptions in the past. In July 2024, the PMI plunged 27 points to 36.9 following nationwide protests, a curfew and a 10-day internet shutdown.

It fell another 8.8 points between March and April 2025 amid extended government holidays, new US tariffs and fuel supply constraints. Between October and November last year, it dropped 7.8 points as weaker global demand, lower export competitiveness and uncertainty ahead of the national election affected investment decisions.

The figures also point to the need for more detailed data, the release said.

The current survey covers 212 services firms, 92 manufacturers, 50 construction companies and 46 agricultural businesses. Sector-specific PMI data, particularly for ready-made garments, small and medium enterprises and services, could provide a clearer picture of where economic pressures are emerging.

The release also proposed combining the PMI with a business confidence index to strengthen economic monitoring and forecasting.