Purchasing Managers Index (PMI) indicator of economic health (Download PDF)

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Purchasing Managers Index (PMI) is an indicator of economic health, business momentum in the industrial sector of an economy. PMI reflects the investor’s sentiments about the manufacturing sector. PMI is published separately for the manufacturing and services sectors but more importance is given to the manufacturing sector. PMI reading shows above 50 points it indicates economic expansion in either the manufacturing or service sector. The reading below 50 points indicates that contraction of economic activities.

Purchasing Managers Index (PMI)

Purchasing Managers Index (PMI)

Purchasing Managers Index (PMI)

  • India’s PMI was 51.2 in August 2019.

  • The PMI was developed by the Institute for Supply Management (ISM) which is a non-profitable US-based organization that was founded in 1915.

  • PMI data in India is published by Japanese firm Nikkel and again it compiled by Market Economics, HSBC.

  • It uses 5 indicators to measure PMI that includes new orders, inventory levels, production, supplies deliveries, and employment environment.

Relation between PMI and IIP

  • Purchasing Managers Index (PMI) is different from the Index of Industrial Production (IIP).

  • The Index of Industrial Production tracks actual production of manufacturing but PMI is used to track the investor sentiment.

  • PMI covers only private sector companies but IIP covers both the private and public sectors.

  • PMI covers both the manufacturing and service sector but IIP covers only the manufacturing sector.

  • PMI is not used in the calculation of GDP but IIP is used in GDP calculation.

- Published/Last Modified on: January 5, 2020

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