Purchasing Managers’ Index (PMI)

• Purchasing Managers’ Index (PMI) is an economic indicator, which is derived after monthly surveys of different companies.

• It measures activity at the purchasing or input stage making is very different from industrial production which is indicative of actual production.

• There are two types of PMI — Manufacturing PMI and Services PMI.

• The index shows trends in both the manufacturing and services sector.

• PMI does not capture informal sector activity.

• S&P Global (a global major in financial information and analytics) releases PMI data for india.

• PMI is calculated by aggregating the scores from all the responses; the formula for calculating PMI varies slightly depending on the organisation compiling it, but it generally involves summing up the scores and dividing by the number of responses. PMI value is interpreted as:-

1.PMI score above 50: Indicates an expansion in the sector.

2.PMI score at 50: Suggests no change in the sector.

3.PMI score below 50: Indicates a contraction in the sector.

• PMI value is then published regularly, often on a monthly basis, to provide insights into the health and trends of the manufacturing sector.