Important Facts For Prelims
Purchasing Managers Index
- 03 Jan 2023
- 3 min read
Why in News?
As per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI), the manufacturing sector in India had its most significant production growth in 13 months in December 2022.
- For the October to December quarter, the PMI averaged 56.3, the highest in a year. It indicates that the manufacturing sector is performing well and may be contributing to job creation.
What is Purchasing Managers Index?
- 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.
- IHS Markit is part of S&P Global.
What is the Significance of PMI?
- The PMI is widely followed as an indicator of economic health because the manufacturing and services sector is a key driver of economic growth.
- In general, a high PMI reading is seen as a positive sign for the economy, as it indicates that the manufacturing and services sectors are performing well and contributing to economic growth.
- A low PMI reading is seen as a negative sign, as it indicates that the manufacturing and services sectors are struggling and may be dragging down overall economic performance.
UPSC Civil Services Examination, Previous Year Questions (PYQ)
Q. What does S & P 500 relate to? (2008)
(a) Supercomputer
(b) A new technique in e-business
(c) A new technique in bridge building
(d) An index of stocks of large companies
Ans: (d)
Exp:
- S&P 500 or Standard & Poor’s 500 is an American Stock index, which is widely regarded as the best gauge of large-capital US Equities.
