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.
- 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.
- The Purchasing Managers' Index can range between 0 and 100, with a number over 50 citing expansion and under 50 noting contraction.
