Purchasing Managers’ Index

Purchasing Managers’ Index Latest News

Recently, India’s Purchasing Managers’ Index (PMI) rose for the first time after three quarters.

About Purchasing Managers’ Index

• It is an indicator of business activity — both in the manufacturing and services sectors.
• It is a survey-based measure that asks the respondents about changes in their perception of some key business variables from the month before.
• It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
• The index helps in determining whether the market conditions, as seen by purchasing managers, is expanding, contracting or staying the same. 
• There are two types of PMI — Manufacturing PMI and Services PMI.

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How is the Manufacturing PMI Derived?

• It is derived by sending fact-based questions to a large number of companies in the concerned sector.
• The questions are related to 5 key variables— new orders, output employment, suppliers’ delivery times and stock of items purchased
• The surveys are conducted on a monthly basis.
• A PMI number greater than 50 indicates expansion in business activity.
• A number less than 50 shows contraction. The rate of expansion is also judged by the difference from the mid-point (50) and also by previous month’s data.
• PMI data for India is released by S&P Global – a global major in financial information and analytics.

Purchasing Managers’ Index FAQs

Q1: Who releases purchasing managers index?

Ans: The Purchasing Managers’ Index (PMI) is released by multiple organizations, including S&P Global, the Institute for Supply Management (ISM), and the Singapore Institute of Purchasing and Materials Management (SIPMM). 

Q2: How is the purchasing manager’s index calculated?

Ans: PMIs are calculated by surveys, which ask purchasing managers whether they think business and industry conditions have improved, remained constant or deteriorated compared to the previous month.

Source: IE