In June 2022, India’s services sector growth hit an eleven-year high in February as per PMI. What does PMI stand for? 

The correct answer is Purchasing Managers' Index.

Key Points

• Purchasing Managers' Index (PMI) is an economic indicator derived from monthly surveys of private sector companies.
• The PMI is considered a key indicator of the economic health of the manufacturing and services sectors.
• A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.
• The PMI is compiled by IHS Markit for over 40 economies worldwide, including India.
• The PMI data is widely used by financial markets to understand economic trends and make investment decisions.

Additional Information

• Components of PMI:
  • PMI is composed of five major components: New Orders, Output, Employment, Suppliers' Delivery Times, and Stocks of Purchases.
  • Each component is seasonally adjusted and weighted to reflect its relative importance to the overall economy.
• Manufacturing vs. Services PMI:
  • There are two main types of PMI: Manufacturing PMI and Services PMI.
  • The Manufacturing PMI focuses on the manufacturing sector, while the Services PMI focuses on the services sector.
• Economic Significance:
  • PMI is an early indicator of economic activity, providing insights before official economic data is released.
  • Central banks, investors, and policymakers use PMI data to make informed decisions about interest rates, investments, and economic policies.
• Global Reach:
  • PMI data is available for many countries, enabling comparisons of economic performance across different regions.
  • The global PMI is often used to gauge the overall health of the world economy.