Manufacturing PMI
India's Manufacturing Purchasing Managers' Index (PMI), published monthly by S&P Global, is a survey-based composite leading indicator that aggregates sub-indices on new orders, output, employment, suppliers delivery times, and input inventories to provide a real-time view of factory sector health, with readings above 50 indicating expansion.
The Manufacturing PMI is compiled from monthly surveys of purchasing managers at around 400 manufacturing companies stratified by sector and size to be representative of the broader industrial economy. The survey covers five sub-components, each of which feeds into the composite headline index with fixed weights: new orders (30%), output (25%), employment (20%), supplier delivery times (15%, inverted), and input inventories (10%).
New orders is the most forward-looking sub-index — it captures order book trends that will drive future production. A sustained reading of new orders above 55 typically signals accelerating output growth over the following 1-2 months. Output reflects current period production and tends to lag new orders by one survey month. Employment captures hiring and firing trends, which reflect management's confidence in demand sustainability. Supplier delivery times are inverted: slower deliveries (signalling supply chain tightness and demand strength) push the index higher.
India's Manufacturing PMI consistently ranked among the highest globally in 2023-24, with readings frequently above 56-57. This reflected robust domestic demand, export order recovery in sectors like electronics and defence, and global supply chain diversification benefiting Indian manufacturers (particularly in mobile phones and API pharmaceuticals). The headline PMI is useful for confirming or challenging the GDP growth narrative in real time — India's manufacturing sector PMI expansion during FY24 corroborated MOSPI's advance estimates of above-7% GDP growth.
Input prices and output prices sub-components (which are not part of the composite but are separately reported) provide inflation signals. When input cost pressures exceed firms' ability to pass through via output prices, margin compression is signalled. This information complements the RBI's surveys on inflation expectations.
The PMI differs from the Index of Industrial Production (IIP) in being survey-based and available within days of month-end, while IIP is released with a 6-week lag. Both are used in combination — PMI as the near-real-time signal and IIP as the retrospective confirmation — to track the manufacturing cycle.