Page 25 - Policy Economic Report - September 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

different dimensions of economic activity and can reveal potential bottlenecks or strengths within
the sector.

• PMI data is also available for many countries around the world and hence can be compared across
different regions.

Disadvantages of the PMI

• PMI readings can be volatile from month to month due to various factors such as seasonal
variations, supply chain disruptions, or changes in market sentiment. This volatility can make it
challenging to discern longer-term trends. PMI data can also be subject to revisions as more
accurate information becomes available.

• The PMI might not fully capture the influence of external factors such as geopolitical events,
changes in trade policies, or natural disasters. These factors can have significant impacts on
economic activity but might not be explicitly reflected in the PMI. For this reason, the PMI may
not truly reflect all potential implications.

How Do Policymakers Use PMI Data for Decision-Making?

• Policymakers, including central banks, consider PMI data when formulating economic policies. If
the PMI indicates a slowdown, they might consider loosening monetary policy to stimulate
growth.

• Conversely, if it suggests overheating, they might tighten policy to curb inflation. PMI data thus
helps guide policy adjustments.

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