Purchasing Managers’ Indices (PMI)

Purchasing Managers’ Indices (PMI): Private sector output and growth levels fell to a 14-month low, as per HSBC Flash PMI.

• Purchasing Managers’ Index (PMI): It is an indicator of business activity, both in the manufacturing and services sectors. 

o It is a survey-based measures that asks the respondents about changes in their perception of some key business variables from the month before. 

o It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.

• Method of Formulation: The PMI is derived from a series of qualitative questions based on 5 key variables - new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stock of items purchased (10%). 
• PMI Numbers: The indices vary between 0 and 100.A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction.
• Frequency of its release: The PMI is released at the start of every month.