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Manufacturing PMI slows down in December
Why is it in the news ?
- Manufacturing Purchasing Managers’ Index (PMI) slowed down a bit to 53.2 in December as against 54 in November.
- However, it is still in expansion mode.
More in the news
- The manufacturing PMI indicated that the sector ended 2018 on a high, with growth stronger than seen at the start of the year.
- Although new orders and output expanded at a slower rate last month, both have remained well into expansion territory for more than a year, supported by weaker inflationary pressures.
- December saw the weakest increase in input costs for nearly three years, giving factories room to cut their prices for the first time since July 2017.
- It increases the likelihood inflation will be benign in coming months.
- The consumer price index hit a 17-month low of 2.33% in November, remaining well below the Reserve Bank of India’s medium-term target of 4% for a fourth straight month.
- These signs of easing inflationary pressures indicate that we’re likely to see the RBI adopt an accommodative monetary policy stance in early 2019.
The PMI Index
- This index is prepared on the basis of a survey which is conducted among purchasing executives in over 400 companies.
- These companies are divided into eight broad categories:(1) Basic metals,(2) Chemicals and plastics,(3) Electrical and optical,(4) Food and drink,(5) Mechanical engineering,(6) Textiles and clothing,(7) Timber and paper,(8) Transport.
- Index over 50 shows expansion, while below 50 mean contraction.
- Prepared by IHS Markit, this index is widely quoted to explain latest industrial situation in a nation.
Source
Indian Express.