What is PMI (Purchasing Managers' Index)?

PMI (Purchasing Managers' Index) is an economic indicator that provides insight into the health of a country’s manufacturing and services sectors. It is based on surveys of purchasing managers in different industries and is used to gauge business conditions, such as

• - New orders

• - Inventory levels

• - Production

• - Supplier deliveries

• - Employment

Key Points About PMI:

• Scale:
  PMI is measured on a scale from 0 to 100.

  • Above 50: Expansion in activity

  • Below 50: Contraction

  • Exactly 50: No change

• Types of PMI:

  • Manufacturing PMI – Covers goods-producing sector

  • Services PMI – Covers service-oriented businesses

  • Composite PMI – Combines manufacturing and services

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  Published By:

  • In the US: S&P Global (formerly IHS Markit) and ISM (Institute for Supply Management)

  • In India: S&P Global publishes the data

Why PMI is Important:

• It is a leading indicator—it gives early signs of economic trends

• Used by central banks, analysts, and investors for:

  • - Interest rate decisions

  • - Stock market outlook

  • - Inflation expectations

  • - Business confidence

Example:

If India's Manufacturing PMI rises from 52 to 55, it means factories are receiving more orders, producing more goods, and hiring more people—signaling economic growth.