Dec manufacturing PMI at 18-month low on slower pace of orders, output
- India’s manufacturing activity recently slipped to an 18-month low in December 2023, as per the HSBC India Manufacturing Purchasing Managers’ Index.
- The reading for the month stood at 54.9 compared to 56 in November.
- The decline was attributed to a weaker rise in new orders and output.
Purchasing Managers Index
- 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.
- Purpose: 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.
- It does not capture informal sector activity.
- 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.
Significance of PMI
- It is considered a good leading indicator of economic activity.
- It is usually released at the start of every month.
- Central banks of many countries also use the index to help make decisions on interest rates.
- It also gives an indication of corporate earnings and is closely watched by investors as well as the bond markets.
- A good reading of index enhances the attractiveness of an economy vis-a-vis another competing economy.
Prelims Takeaway
- Purchasing Managers Index
- Core Sectors