PURCHASING MANAGER INDEX

Subject: Economy

 Context:

 The pace of contraction in services sector activity eased considerably in September after the government lifted some COVID-19 restrictions, but demand continued to shrink, prompting firms to cut more jobs, a business survey(PMI) showed recently.

 Concept:

• PMI is an indicator of business activity- in the manufacturing and services sectors.
• Calculation of PMI
  • It is a survey-based measure that asks the respondents about changes in their perception about key business variables as compared with the previous month.
  • It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
• The latest composite PMI decreased to 49.8 in September 2019 from 52.6 in August 2019.
• The PMI is a number from 0 to 100.
• PMI above 50 represents an expansion when compared to the previous month;
• PMI under 50 represents a contraction, and A reading at 50 indicates no change.
• Purpose: To provide information about current and future business conditions to company decision-makers, analysts, and investors. As the official data on industrial output, manufacturing and GDP growth comes much later, PMI helps to make informed decisions at an earlier stage