What is PMI (Purchasing Managers' Index)?

By Vijay in 3 Jul 2025 | 20:46
Vijay

Vijay

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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


  • 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.


3 Jul 2025 | 20:46
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