Purchasing Managers’ Index

What is in the News ?

• India’s manufacturing sector expanded at three-month high in March driven by resilience in demand, growth in factory orders and easing input cost pressure, a private survey showed.

Purchasing Managers’ Index

• It is a private monthly survey-based measure that asks respondents about changes in their perception of key business variables compared to the previous month.
• Calculated separately for manufacturing and services sectors, then a composite index is constructed.
• Published by Japanese firm Nikkei but compiled by IHS Markit for over 40 economies worldwide.
• 0 to 100 (Score above 50 indicates expansion, below 50 denotes contraction, and 50 indicates no change)
• Parameters
  •  new orders, inventory levels, production, supplier deliveries, and employment. (weighted equally)
• Significance
  • Provides information about current and future business conditions for decision-makers, analysts, and investors.
  • Widely followed as an indicator of economic health, a high PMI reading is seen as positive, low PMI reading is seen as negative for overall economic performance.

Practice Questions for Prelims

Consider the following statements with respect to Purchasing Managers Index (PMI):
1. PMI is an indicator of manufacturing activity only
2. It is a survey based measure that asks the respondents about changes in their perception of some key business variables from the month before

Which of the following given below codes are correct?
a) 1 only
b) 2 only|
c) Both 1 and 2
d) Neither 1 nor 2

Ans. b)

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