Table of Contents
WHAT IS PURCHASING MANAGERS’ INDEX?
- PMI is an indicator of business activity.
- It is a survey-based measures 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.
- If the figure is higher than the previous month’s then the economy is expanding at a faster rate.
- If it is lower than the previous month then it is growing at a lower
WHICH BODY RELEASES PMI DATA?
- Institute for Supply Management- for USA
- Singapore Institute of Purchasing and Materials
- IHS Markit- for 30 countries
- The Markit survey covers private sector companies, but not the public sector.
IMPORTANCE OF PMI
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes
- It is, therefore, considered a good leading indicator of economic activity.
WHAT IS THE REASON?
- The nationwide lockdown in April, coupled with a crash in export orders, led to unprecedented contraction in manufacturing output.
- The survey highlighted how reduced demand had led to new businesses collapsing at a record pace in April, while firms sharply trimmed staff numbers.
UPCOMING DAYS?
- April will undoubtedly be the harshest month of FY21.
- It had the most stringent lockdown and the worst global
- We expect the situation to ease, but there is no chance of growth, given how exports have gone down 35%; automobiles have seen 45% fall, while steel output has tanked 23%,” said D K Joshi, chief economist, CRISIL.
- The top 10 states in terms of gross domestic product (GDP), which together contribute 70% of India’s GDP, have 35% of their districts categorized as ‘red zones’ (areas with high infection rates), on average.
- Most of the lockdown relaxations are not applicable in these areas.
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