The Purchase Manager Index (PMI) is announced every month for the previous month by the IHS Markit. This PMI is basically a measure of optimism among the purchasing managers of corporates. To give a more reliable picture, the PMI is announced separately for manufacturing and for services with the services PMI being announced a couple of days after the manufacturing PMI are announced. There are two basic things that one needs to remember about PMI interpretation. Firstly, the level of 50 is considered to be the cut-off for the PMI. A PMI of above 50 indicates that the business is expanding in absolute terms while a PMI of below 50 indicates that the PMI is contracting in absolute terms. Secondly, from a PMI perspective the sequential PMI on a month-on-month basis is also equally important as it captures whether the momentum is favourable or unfavourable. Thus even if the PMI is above 50 but the number is showing a fall on a sequential basis, then it is a signal of the segment losing momentum.

impact of demonetization

Interpreting the PMI-Manufacturing numbers..


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