Factory output growth decelerates: PMI



  • IHS Markit survey shows April production, new orders expansion at 8-month lows on COVID surge
  • India’s manufacturing sector activity was largely flat in April, as rates of growth for new orders and output eased to eight-month lows amid the rise in COVID-19 cases, a monthly survey showed.
  • The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) was at 55.5 in April, little changed from March’s reading of 55.4.
  • In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
Global factory output growth close to decade high despite export fall from  China | IHS Markit

Surging input costs

  • On the prices front, survey participants also signalled a steep increase in input costs, the quickest since July 2014, and upward revisions to selling prices.
  • April saw the steepest increase in input costs for nearly seven years drive the sharpest upturn in output charges since October 2013.
  •  While output and sales increased at the slowest rates since last August due to an intensification of the COVID-19 crisis, there was a faster upturn in international orders.
  • New export orders increased for the eighth consecutive month in April and at the fastest rate since October 2020.
  •  The rise was associated with a pick-up in international demand for Indian goods.
  •  On the job front, although manufacturing employment continued to fall, the rate of contraction recorded in April was marginal and the weakest in the current 13-month sequence of job shedding.


About Purchasing Managers’ Index (PMI)

  • It is an economic indicator that is calculated from monthly surveys of purchasing managers and supply executives from specific companies.
  • The Purchasing Managers’ Index (PMI) data are compiled by IHS Markit for more than 40 economies worldwide.
  • The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories.
  • The Purchasing Managers' Index is based on five major indicators are new orders, inventory levels, production, supplier deliveries and the employment environment.

Significance of Purchasing Managers’ Index (PMI)

  • The PMI Manufacturing gives an indication of the economic health of the manufacturing sector.
  • The investors use PMI surveys as leading indicators of economic health, given their insight into sales, employment, inventory, and pricing.
  • The purchasing managers' index is an extremely important indicator for international investors looking to form an opinion on economic growth.

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  • 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.

○ If PMI of the previous month is higher than the PMI of the current month (as is the case mentioned above), it represents that the economy is contracting.

○ The PMI is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.


● 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.





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