PURCHASING
MANAGER INDEX (PMI) - REPORTS & INDICES
News: Services PMI signals September boost
What's
in the news?
●
India’s services sector activity gained
momentum in September, with new orders rising at the second fastest rate since
June 2010, as per the S&P Global India Services Purchasing Managers’ Index
(PMI), which moved up to 61 from 60.1 in August.
Key
takeaways:
●
New orders rise at the second-fastest rate since June 2010,
S&P Global India Services Purchasing Managers’ Index shows; cost pressures
ease, helping lift sentiment on the year-ahead business outlook to a nine-year
high and spurring new hiring.
PMI:
●
It is a survey-based measure that asks the respondents about changes in
their perception of key business variables as compared with the previous month.
●
It is an index of the prevailing direction
of economic trends in the manufacturing
and service sectors.
Objectives:
●
The purpose of the PMI is to provide
information about current and future business conditions to company decision
makers, analysts, and investors.
Calculations:
●
It is calculated separately for the
manufacturing and services sectors and then a composite index is also constructed.
●
The PMI is a number from 0 to 100.
Takeaways:
●
A
print above 50 means expansion, while a score below that denotes contraction.
●
A reading at 50 indicates no change.
●
If the PMI of the previous month is higher
than the PMI of the current month, it represents that the economy is
contracting.
●
It is usually released at the start of every month.
●
It is, therefore, considered a good
leading indicator of economic activity.
●
PMI is compiled by IHS Markit for more
than 40 economies worldwide.
○
IHS Markit is a global leader in
information, analytics and solutions for the major industries and markets that
drive economies worldwide.
○
IHS Markit is part of S&P Global.
●
As the official data on industrial output,
manufacturing and Gross Domestic Product (GDP) growth comes much later; PMI
helps to make informed decisions at an earlier stage.
IIP
vs PMI:
●
It is different from the Index of
Industrial Production (IIP), which also gauges the level of activity in the
economy.
●
IIP covers the broader industrial sector
compared to PMI.
●
However, PMI is more dynamic compared to a
standard industrial production index.