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
