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Economy & Finance

Purchasing Managers' Index (PMI)

A monthly survey-based gauge of business activity where 50 separates growth from contraction; exams ask the threshold, compiler and how it differs from the IIP.

Pareto Academy · updated 26 October 2026

At a glance

The Purchasing Managers' Index (PMI) is a monthly indicator built from a survey of purchasing managers at private companies, who say whether things such as orders, output and hiring went up, down or stayed the same compared with the previous month. In India it is published as the HSBC India PMI and compiled by S&P Global. A reading above 50 means expansion, below 50 means contraction.

Key facts

  • Name in India: HSBC India Manufacturing PMI and HSBC India Services PMI
  • Compiled by: S&P Global (sponsor: HSBC)
  • Panel: about 400 manufacturers for the manufacturing PMI, and a similar panel of service providers
  • Manufacturing data collection began: March 2005
  • Threshold: 50 (above = expansion, below = contraction, exactly 50 = no change)
  • Release: manufacturing on the first working day of the month; services about two days later; a "flash" estimate comes late in the month itself
  • Composite PMI: weighted average of manufacturing output and services business activity
  • Type: diffusion index from a survey; not a measure of production volume

How it works

Diffusion index. For each question the index equals the percentage of firms reporting an improvement plus half the percentage reporting no change. So if every firm says "no change", the index is exactly 50.

Manufacturing PMI components.

Sub-index Weight
New orders 30%
Output 25%
Employment 20%
Suppliers' delivery times (inverted) 15%
Stocks of purchases 10%

Services PMI. It is based mainly on a single question about business activity compared with a month earlier.

PMI vs IIP.

Feature PMI IIP
Compiled by S&P Global for HSBC (private) MoSPI/NSO (government)
Basis Survey of opinions (direction of change) Actual production data
Covers Manufacturing and services Mining, manufacturing, electricity
Released Start of the next month Late in the following month

Recent developments

  • 6 Oct 2026: HSBC India Services PMI for September rose to 55.2 (from 54.1); Composite PMI rose to 55.9 (from 54.3).
  • 1 Oct 2026: HSBC India Manufacturing PMI for September rose to 55.1 from 52.8, a seven-month high (flash estimate 55.7).

Exam traps

  • A PMI that falls from 56 to 53 still shows expansion, only at a slower pace; contraction needs a reading below 50.
  • The PMI in India is compiled by S&P Global (earlier IHS Markit), not by MoSPI, the RBI or the Commerce Ministry.
  • The composite PMI is not a simple average of the headline manufacturing and services PMIs; it uses manufacturing output and services activity indices.
  • The Index of Core Industries (DPIIT) and the IIP (MoSPI) measure production; the PMI measures sentiment-based direction of change.

Quick check

  • Q: What PMI reading separates expansion from contraction? A: 50.
  • Q: Who compiles India's PMI? A: S&P Global, for HSBC.
  • Q: Which sub-index has the largest weight in the manufacturing PMI? A: New orders (30%).

Further reading

Sources

In the news

Every time this topic has appeared in our current affairs, newest first:

  1. Week of 1–7 October 2026Manufacturing PMI climbs to a seven-month high of 55.1
  2. Week of 1–7 October 2026Services PMI rises to 55.2; composite at 55.9