Purchasing Managers Index PMI
The Purchasing Managers Index (PMI) is a monthly survey-based economic indicator that measures the business activity levels of purchasing managers in the manufacturing and services sectors. A PMI above 50 indicates expansion; below 50 indicates contraction.
What Is the PMI?
PMI surveys purchasing managers at hundreds of companies every month and asks them about changes in:
– New orders received
– Output levels
– Employment
– Supplier delivery times
– Input prices
Each factor receives a score: if it improved, deteriorated, or stayed the same. The index is then calculated so that 50 represents no change from the previous month.
Interpreting PMI
| PMI Range | Economic Signal |
|———–|—————-|
| Above 55 | Strong expansion |
| 50-55 | Moderate expansion |
| Exactly 50 | No change |
| 45-50 | Moderate contraction |
| Below 45 | Strong contraction |
India’s PMI: Who Publishes It?
In India, PMI surveys are conducted by S&P Global (formerly IHS Markit):
– **Manufacturing PMI**: covers the manufacturing sector; released on the first business day of each month
– **Services PMI**: covers the services sector; released a few days after manufacturing PMI
– **Composite PMI**: combines manufacturing and services
Why PMI Matters
– **Leading indicator**: surveys purchasing managers about what they see coming, not historical data
– **Quick release**: published within a day or two of the survey month ending, before GDP or industrial production data
– **Sentiment indicator**: captures business confidence, which drives investment and hiring decisions
India’s Recent PMI Performance
India’s Manufacturing PMI has consistently been above 55 through 2023-24, reflecting strong industrial activity. India’s Services PMI has been among the highest globally in the same period, reflecting the strength of IT, hospitality, and financial services.
Key Takeaways
– PMI is a monthly survey index measuring business activity; above 50 = expansion, below 50 = contraction
– Covers new orders, output, employment, and input prices for manufacturing and services
– India’s PMI is published by S&P Global; manufacturing PMI is released on the first business day monthly
– PMI is a leading indicator, giving advance notice of economic trends before GDP data arrives
– India’s PMI has been strong (55+) through 2023-24, reflecting broad-based economic momentum
