Why is it in the news?

• The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) dropped to 57.5 from 58.6 in August.

Purchasing Managers’ Index (PMI): An Economic Indicator

• The Purchasing Managers’ Index (PMI) is a crucial economic indicator that provides insights into the prevailing direction of economic trends in both the manufacturing and service sectors.
• It is derived from monthly surveys conducted among various companies to gauge their economic activities.

Types of PMI

• Manufacturing PMI
• Services PMI
• Combined Index (Manufacturing and Services PMI)

Methodology  

• Compiled by IHS Markit.
• Panel of approximately 400 manufacturers surveyed.
• Survey responses collected in the second half of each month.
• Indicates the direction of change compared to the previous month.

Calculation of PMI

• PMI is represented on a scale of 0 to 100;
• Above 50 indicates expansion;
• Below 50 denotes contraction;
• A reading of 50 signifies no change; and
• A decrease from the previous month suggests economic contraction.

Purpose

• To provide information about current and future business conditions.
• Target audience includes company decision-makers, analysts, and investors.
• Helps assess whether market conditions, as perceived by purchasing managers, are expanding, contracting, or remaining stable.

About IHS Markit

• A London-based global leader in information, analytics, and solutions.
• Focuses on major industries and markets that drive worldwide economies.