What is PMI?

• 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. 

How to read PMI?

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

Why in News?

• India’s Services sector reported a sharp growth in new business in December 2022, led by finance and insurance services, as per the Services Purchasing Managers’ Index (PMI) which surged to 58.5 last month from 56.4 in November 2022. 

https://www.thehindu.com/business/Industry/services-pmi-shows-surge-in-december-2022-private-sector-output-growth-rises-to-11-year-high/article66336901.ece