Purchasing Managers’ Index (PMI)

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    In News 

    • IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose from 55.9 in October to 57.6 in November.
    • The Indian manufacturing sector continued to expand strongly in November, as an accelerated rise in sales supported the fastest upturn in production for nine months.
    • This signalled the strongest improvement in the health of the sector for ten months

     Image Courtesy: IE

    Purchasing Managers’ Index (PMI)

    • It is an index of the prevailing direction of economic trends in the manufacturing and service sectors.
    • It is an economic indicator, which is derived after monthly surveys of different companies.
    • There are two types of PMI — Manufacturing PMI and Services PMI.
    • A combined index is also made using both manufacturing PMI and services PMI.
    • Methodology : 
      • The PMI is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers, based on company workforce size, based on contributions to GDP. 
      • Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month.
        • IHS Markit is a London based global leader in information, analytics and solutions for the major industries and markets that drive economies worldwide.
    • Calculation of PMI:
      • It is indicated by a number from 0 to 100.
      • A print above 50 means expansion while a score below 50 denotes contraction.
      • A reading at 50 indicates no change.
      • If the previous month PMI is higher than the current month PMI, it represents that the economy is contracting.
    • Purpose: 
      • To provide information about current and future business conditions to company decision-makers, analysts, and investors.
      • The index helps in determining whether the market conditions, as seen by purchasing managers, is expanding, contracting or staying the same

    Source: IE