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Consider the following statements regarding the Purchasing Managers’ Index:
- It is an indicator of business activity for both the manufacturing and services sectors.
- It is published on a monthly basis.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding the Purchasing Managers&rs...
Explanation:
Statement 1: It is an indicator of business activity for both the manufacturing and services sectors.
- The Purchasing Managers' Index (PMI) is indeed an indicator of business activity for both the manufacturing and services sectors. It provides insight into the economic health of the manufacturing and services industries by surveying purchasing managers on various factors such as new orders, production levels, employment, and supplier deliveries.
Statement 2: It is published on a monthly basis.
- The PMI is typically published on a monthly basis by various organizations such as the Institute for Supply Management (ISM) in the United States and IHS Markit in other countries. This frequency allows for timely updates on the performance of the manufacturing and services sectors, enabling businesses and policymakers to make informed decisions based on current economic conditions.
Therefore, both statements 1 and 2 are correct regarding the Purchasing Managers' Index. It serves as a valuable tool for monitoring business activity in both the manufacturing and services sectors and is updated regularly to provide up-to-date information on economic trends.
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Consider the following statements regarding the Purchasing Managers&rs...
India’s manufacturing sector continued to perform better with S&P Global Purchasing Managers’ Index (PMI) rising to 56 in November against 55.5 in October.
- It is an indicator of business activity -- both in the manufacturing and services sectors.
- It is a survey-based measures that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- The index helps in determining whether the market conditions, as seen by purchasing managers, is expanding, contracting or staying the same.
- There are two types of PMI — Manufacturing PMI and Services PMI.
How is the manufacturing PMI derived?
- It is derived by sending fact-based questions to a large number of companies in the concerned sector.
- The questions are related to 5 key variables. The variables with their weights in the index are — new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stock of items purchased (10%).
- The surveys are conducted on a monthly basis.
- A PMI number greater than 50 indicates expansion in business activity.
- A number less than 50 shows contraction. The rate of expansion is also judged by the difference from the mid-point (50) and also by previous month’s data.
- PMI data for India is released by S&P Global - a global major in financial information and analytics.
- Earlier PMI data is India was released by IHS Markit before its merger with S&P.
- The Manufacturing PMI measures the performance of India’s manufacturing sector and is derived after a survey of approx. 500 manufacturing companies.
Hence both statements are correct.
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Consider the following statements regarding the Purchasing Managers’ Index: It is an indicator of business activity for both the manufacturing and services sectors. It is published on a monthly basis.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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