(SYLLABUS RELEVANCE: GS 3: Economy)
Why is it in the news?
India’s services sector output, as measured by Purchasing Managers’ Index (PMI), eased from a 13-year high of 62.3 in July to 60.1 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)
- 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.
|1)||A London-based global leader in information, analytics, and solutions.|
|2)||Focuses on major industries and markets that drive worldwide economies.|
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.
- 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.