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 Manufacturing Purchasing Managers’ Index (PMI) for October was mildly higher at 55.3, compared with September’s 55.1, but remained above its long-run average, indicating a stronger improvement in the manufacturing sector’s health.
• A PMI reading above 50 indicates expansion.

Reference:

https://www.thehindu.com/business/india-factory-output-growth-new-orders-ease-to-4-month-lows-pmi/article66083010.ece