India’s manufacturing sector growth inches up to 52.5 in July: PMI

  1. According to Nikkei India Manufacturing Purchasing Managers’ Index (PMI) data, manufacturing activity increased to 52.5 in July,2019 from 52.1 in June,2019.
  2. PMI has improved as new work orders and output strengthened leading to moderate increase in employment.Apart from this,a key factor that is aiding sentiment among Indian manufacturers is the expectation of further monetary easing.
  3. 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.
  4. 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.
  5. The headline PMI is a number from 0 to 100.The figure above 50 denotes expansion in business activity.Anything below 50 denotes contraction.
  6. The rate of expansion can also be judged by comparing the PMI with that of the previous month data.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 rate.