PMI (Purchasing Managers' Index) is one of the most reliable leading indicators, typically signaling economic turns 2-3 months ahead. Key reading rules: (1) The 50 threshold is critical — above 50 = expansion, below 50 = contraction. But the direction of change matters more: rising from 47 to 49 is bullish even though below 50. (2) Check sub-components separately: New Orders (most forward-looking), Employment (labor demand), Prices Paid (inflation pressure), Supplier Deliveries (supply chain stress). (3) New Orders minus Inventories is a powerful leading indicator — positive readings suggest production must accelerate. (4) Compare Manufacturing PMI vs. Services PMI — divergence reveals sector rotation. (5) Cross-country comparison: when U.S., Euro area, and China PMIs all decline simultaneously, global recession risk is elevated. (6) ISM PMI (U.S.) vs. S&P Global PMI — ISM has a larger sample and longer history, making it the market's preferred gauge.