Purchasing Managers index (PMI)
Source : The Hindu
GS III : Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

Why in News ?

India’s manufacturing sector activity was largely flat in April as rates of growth for new orders and output eased to eight-month lows amid the intensification of the COVID-19 crisis, a monthly survey said on May 3.

Key Facts

• The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April, little changed from March’s reading of 55.4.
  • In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
• PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to eight-month lows amid the intensification of the COVID-19 crisis.
• The survey participants also signalled a steep increase in input costs.
• While output and sales increased at the slowest rates there was a faster upturn in international orders.
  • New export orders increased for the eighth consecutive month.
• Manufacturing employment continued to fall.

Purchasing Managers index

• The Purchasing Managers Index (PMI) is an index of the direction of economic trends in the manufacturing and service sectors.
• It analyse by purchasing managers market conditions point of view are expanding, staying the same, or contracting.
• It will provide information of current and future business conditions to company decision makers, analysts, and investors.
• The PMI is compiled and released monthly by the Institute for Supply Management (ISM).
  • The PMI is based on a monthly survey sent to senior executives at more than 400 companies in 19 primary industries.
• The PMI is based on five major survey areas
  • New orders
  • Inventory levels
  • Production
  • Supplier deliveries
  • Employment
• The PMI is a number from 0 to 100.
  • A PMI above 50 represents an expansion when compared with the previous month.
  • A PMI reading under 50 represents a contraction when compared with the previous month
  • PMI reading at 50 indicates no change.
  • Away from 50 the greater the level of change.

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