Manufacturing PMI: India’s manufacturing growth jumps to six-month high in June 2018

According to Nikkei Manufacturing Purchasing Managers’ Index (PMI), compiled by IHS Markit, India’s manufacturing growth jumps to six-month high in June 2018. Manufacturing PMI rose to 53.1 in June 2018 from 51.2 in May 2018, the highest since December 2017. This is the 11th consecutive month that the manufacturing PMI remained above the 50-point mark. The reading above 50 on index denotes expansion and less than that indicates contraction in activities.

Purchasing Managers’ Index (PMI)

PMI is an indicator of business activity-both in the manufacturing and services sectors. It is a survey-based measure that asks respondents about changes in their perception of some key business variables from month before. It is calculated separately for manufacturing and services sectors and then composite index is constructed.

Implications for economy

PMI is usually released at start of month, much before most of official data on industrial output, manufacturing and GDP growth is made available. It is, therefore, considered as good leading indicator of economic activity. Manufacturing growth measured by PMI is considered good indicator of industrial output.

Month: Current Affairs - July, 2018