What is Manufacturing Purchasing Manager’s Index (PMI)?
The Manufacturing PMI is a performance measurement of the manufacturing & services sector, derived from a 500 manufacturing companies’ survey. It aids in gauging business activity and confidence levels.
Its weighted components are as follows:
It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
How to read the PMI data?
– >50 figures indicate an expansion of the manufacturing sector compared to the previous month.
– <50 indicates a contraction.
– =50 indicates no change
What does PMI data mean for Financial Markets?
It serves as an indicator of corporate earnings, thereby, influencing equity & debt investors, alike. It is also a good parameter to compare attractiveness of an economy vis-a-vis another competing economy.
PMI Reading – July 2020
What is the latest reading?
The PMI figure in July 2020 stands at 46, compared with 47.2 in June
Virus cases still rising and even the lockdown across multiple states, which indicates that the long road back to normality for the manufacturing sector.
