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 compiled and constructed by IHS Markit, an information services provider.
- PMI is an investor sentiment tracking index and is more dynamic in nature. It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before. 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?
- For India’s manufacturing sector, new orders and production levels recorded their strongest growth so far in 2023 during April as per the seasonally adjusted India Manufacturing Purchasing Managers’ Index (PMI), which rose to 57.2 from 56.4 in March.