Services Purchasing Managers’ Index

The Nikkei India Services Purchasing Managers’ Index (PMI) rose to 50.7 in February from 49.4 in January. A reading above 50 denotes an expansion in business activity while one below 50 implies a contraction.

Purchasing Managers’ Indexes (PMI) are economic indicators derived from monthly surveys of private sector companies. The data for the index are collected through a survey of 400 purchasing managers in the manufacturing sector on seven different fields, namely, production level, new orders from customers, speed of supplier deliveries, inventories, order backlogs and employment level.

The Nikkei India Services Business Activity Index signalled growth in February as businesses recovered from the demonetisation-related disruptions seen in each of the previous three months.

The index fell to 46.7 in November, the month demonetisation was announced, the lowest it had been in almost three years. The index posted a tad higher reading of 46.8 in December but was still firmly depicting a contraction in business activity.

The Purchasing Managers’ Index (PMI) is an indicator of the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

The purpose of the PMI is to provide information about current business conditions to company decision makers, analysts and purchasing managers.