The index is based on a survey of a large number of participants who answer questions like "Have the conditions improved for your business in terms of new orders, prices, labor market, the timing of orders, etc.?", while the respondent selects one of the three types of response: "No", "Yes" or "Not changed". Such indexes very effectively monitor the dynamics of the economic cycle being leading indicators.
When the index starts to fall after a period of growth, this predicts the transition of the business cycle from the growth stage to decline, while its turn upwards after the fall predicts the beginning of recovery.
The indicator values about 50 points indicate that during the reporting period there was neither extension no reduction of the manufacturing sector. Values above 50 indicate growth in this sector. Figures below 50 may indicate deterioration in the industry.
The index has a significant impact on the market.