Purchasing Managers’ Index
- 05 May 2021
- 2 min read
Why in News
The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April 2021, little changed from March’s reading of 55.4.
- It is a survey-based measure that asks the respondents about changes in their perception about key business variables as compared with the previous month.
- The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.
- It is calculated separately for the manufacturing and services sectors and then a composite index is also constructed.
- The PMI is a number from 0 to 100.
- A print above 50 means expansion, while a score below that denotes contraction.
- A reading at 50 indicates no change.
- If PMI of the previous month is higher than the PMI of the current month, it represents that the economy is contracting.
- It is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.
- PMI is compiled by IHS Markit for more than 40 economies worldwide.
- IHS Markit is a global leader in information, analytics and solutions for the major industries and markets that drive economies worldwide.
- As the official data on industrial output, manufacturing and Gross Domesr\tic Product (GDP) growth comes much later, PMI helps to make informed decisions at an earlier stage.
- It is different from the Index of Industrial Production (IIP), which also gauges the level of activity in the economy.
- IIP covers the broader industrial sector compared to PMI.
- However, PMI is more dynamic compared to a standard industrial production index.