Purchasing Managers’ Index (PMI)

#GS3 #Economy

Context

  • Manufacturing activity expanded at a slightly improved pace in September, IHS Markit’s survey-based Purchasing Managers’ Index (PMI) signalled. 
  • Even as raw material shortages and high fuel and transport costs intensified, price pressures and pushed input cost inflation to a five-month high. 

Key Points

  • A third straight month of expansion was observed with consumer goods showing the highest growth in output. 
  • International sales picked up momentum. 
  • Business confidence increased on expectations of increased production in the year despite the pandemic. 
  • PMI reading above 50 marks an expansion.
  • But employment showed very little change for the second month in a row. 

Purchasing Managers’ Index (PMI)

  • PMI is an economic indicator calculated from monthly surveys of purchasing managers and supply executives from specific companies.
  • The PMI data are compiled by IHS Markit.
  • The PMI shows a headline number that indicates the overall health of an economy. 
  • The PMI sub-indices provide insights into GDP, inflation, exports, capacity utilization, employment and inventories.
  • The index is based on 5 major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.
  • This index is a determinant for international investors looking to form an opinion on economic growth.
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