We are only conducting Seminars to make Professional Traders. Join Now for Hyderabad and Chennai Seminar.

PMI - Explained in Layman Language

What is PMI?

To understand how the economy works, we have different kinds of metrics like the Index of Industrial Production (IIP) or Gross Domestic Product (GDP). IIP calculates the growth in factory output; GDP measures the size of the economy. Similarly, we have the PMI data that gauges the growth in demand. It does so by evaluating business activity and planned purchases of goods and services. The PMI data is announced separately for manufacturing and services sectors, and is reported as a double-digit figure. Any figure above 50 reflects growth in activity. Consequently, a sub-50 reading denotes a contraction or a fall in activity.

What this means

Higher the figure, greater is the expansion. This means, businesses are getting more fresh orders. PMI thus reflects an improvement in demand, and consequently, the economy. But, as with any other economic data, only a consistent reading will help understand macroeconomic conditions.

 Indian PMI

Manufacturing PMI for October stood at 49.6, the same as September. It has been below 50-levels since August. Services PMI, meanwhile, improved marginally to 47.1 from the over four-year low of 44.6 in September.

 Reading the fine-print

The PMI survey takes into account factors like new orders, outlook for future, employment and production output. Data for October suggests that while there is a marginal pick-up in orders, some stress factors remain like high input price, inventory levels or order backlog.

Input price index and inventory pile-up

High input costs reduce a company’s profitability. This rose to a 16-month high of 64.5 in October despite an appreciation in the rupee in September, according to a Business Standard report. This shows that the industry faces broad-based pressure on pricing. This could also force companies to hike prices to maintain profitability, which could further impact demand. Inventories are the goods that factories produce well in advance of sales. Companies build inventories to make sure goods are available in plenty. However, too much increase will lead to a fall in production until the goods are sold. This also reflects slower demand. Inventories, when compared to new orders, rose to the highest levels since January 2009, the report said. This suggests that manufacturing output could fall going forward.

Most Visited Stocks - Click to Visit Link


"First off all, I just want to say that your service is excellent – by far the best tips service I have encountered and quality of your Jackpot tips is really good and noticed that now I am getting daily profit. I can say that it makes a difference to choose the correct tips provider and it was my luck that I stumbled on your website."

- Rajesh


We Compliment you for becoming a part of mega family of more than 12 Lakh Smart Traders who are getting benefitted with our services worldwide. We assure You that we will deliver more than what we promise. Do remember to leave questions and Feedback. Your Success is Guaranteed with us!

You can Contact us through Contact Box provided on website or Email at info@indian-share-tips.com. You can make Online Payment through Payment Gateway installed on the website as we offer you the highest standard of security currently available on the Net so as to ensure that your online transaction is Private, Safe and Secure.

We Teach and Train our Clients as we want to make sure that clients trade in market as a thorough professional. Charges if any being paid by you are for the teaching and training. We do not provide any stock tips. Your joining is subject to acceptance of our terms and Disclaimer for which link is given on the site at bottom right hand corner. Wherever the word tip is written; it implies an idea which is of informational value and is not suitable for trading. Trade ideas if any are for educational purpose only. We are conducting Seminars to make Professional Traders. Join Now for Bangalore, Chennai and Hyderabad. Leave query through contact form.
Chart> Nifty A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 0-9