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
