Purchasing Managers Index(PMI) for manufacturing slipped to two years low

2 min read

News:The Purchasing Managers Index(PMI) has fallen to a two-year low of 50.6 in October,2019 from 51.4 in September,2019.

Facts:

  • The purchasing managers index has fallen as weakening demand had an effect in the manufacturing industry bringing down the rates of increase in production, employment and business sentiment.

About PMI:

  • PMI or Purchasing Managers’ Index(PMI) is an indicator of business activity both in the manufacturing and services sectors.
  • It is a survey based measures that asks the respondents about changes in their perception of some key business variables from the month before.
  • PMI is derived from a series of qualitative questions.Executives from a reasonably big sample,running into hundreds of firms are asked whether key indicators such as (a)output (b)new orders (c)business expectations and (d)employment were stronger than the month before and are asked to rate them.
  • The index is the sum of the percentage of higher responses and half the percentage of unchanged responses. 
  • The indices vary between 0 and 100 with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.