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Purchasing Managers Index

Purchasing Managers Index:

According to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI), India’s manufacturing sector recorded a slight acceleration in new orders and output which rose to 54.7 in April 2022 from 54 in March 2022.

Highlights of the Index:

  • April data showed a rebound in new export orders, following the first contraction for nine months in March.
  • Contraction, in economics, refers to a phase of the business cycle in which the economy is in decline.
  • A contraction generally occurs after the business cycle peaks, but before it becomes a trough.
  • Inflationary pressures meanwhile intensified, owing to rising commodity prices, the Russia-Ukraine war and greater transportation costs.
  • Input prices increased at the fastest pace in five months, while output charge inflation hit a 12-month high.
  • A major insight from the latest results was an intensification of inflationary pressures, as energy price volatility, global shortages of inputs and the war in Ukraine pushed up purchasing costs.
  • On the job front, there was only a mild increase in employment during April 2022.

PMI:

  • It is a survey-based measure that asks the respondents about changes in their perception of key business variables as compared with the previous month.
  • It is an index of the prevailing direction of economic trends in the manufacturing and service sectors.
  • The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.
  • It is calculated separately for the manufacturing and services sectors and then a composite index is also constructed.
  • The PMI is a number from 0 to 100.
  • A print above 50 means expansion, while a score below that denotes contraction.
  • A reading at 50 indicates no change.
  • If the PMI of the previous month is higher than the PMI of the current month, it represents that the economy is contracting.
  • It is usually released at the start of every month. It is, therefore, considered a good leading indicator of economic activity.

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