India’s manufacturing PMI hits 31 month high

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India’s manufacturing PMI hits 31 month high

Recently, the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) touched a 31-month high of 58.7 in May.

  • The orders are growing fastest on the high demand for Indian products both domestically and internationally, and the market is improving.
  • The PMI data comes a day after data showed that India’s GDP grew at 6.1% in the January-March 2023 quarter, raising the growth forecast for the full year 2022-23 to 7.2%.

Purchasing Managers Index (PMI)

  • It is an index of the prevailing direction of economic trends in the manufacturing and service sectors.
  • It is an economic indicator, which is released after monthly surveys of various companies.
  • It provides information about current and future business conditions to company decision makers, analysts and investors.

Significance:

  • It provides a reliable figure of how an economy is performing as a whole.
  • Central banks also use PMI to decide on interest rates.
  • In addition to affecting equity market volatility, PMI releases also affect bond and currency markets. Suppliers can decide on prices based on PMI fluctuations.
  • The PMI gives an idea about the direction of the economy, and helps economists forecast manufacturing activity in the country.
  • Manufacturers and suppliers use the index to decide their production needs based on new orders in the coming months.
  • This index also helps investors who want to invest in stock markets, as it helps in assessing the economic health of the country.

Source – Indian Express

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