Purchasing Managers’ Index

Purchasing Managers’ Index is an economic indicator which indicates the business activity & economic health of both the manufacturing and service sectors.
PMI of India is published by Japanese firm Nikkei but compiled and constructed by IHS Markit, a London–based global information provider.
PMI is an investor sentiment tracking index and is more dynamic in nature. They are derived from monthly surveys of about 400 private companies.
Variables used for calculating the PMI are: Output, New Orders, Employment, Input Costs, Output Prices, Backlogs of Work, Export Orders, Quantity of Purchases, Suppliers’ Delivery Times, Stocks of Purchases and Stocks of Finished Goods.
PMI, which is usually released at the start of the month, serves as a leading indicator of economic activity. It comes before the official data on industrial output, core sector manufacturing and GDP growth.

While PMI >50 implies an expansion of business and economic activity, PMI <50 means contraction.

According to the latest PMI data, activity in the dominant services industry contracted in May for the first time in eight months as lockdowns to curb the second wave of COVID-19 dampened demand, prompting firms to cut jobs at the fastest pace since October.
The Nikkei/IHS Markit Services Purchasing Managers’ Index fell to a nine-month low of 46.4 in May, from 54.0 in April, sliding below the 50-level that separates growth from contraction for the first time in eight months.

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