The HSBC Purchasing Managers' Index (PMI) is a monthly economic concept and indicator that gauges the health and prevailing economic trends in India's private sector, covering both manufacturing and services. It is not an act, institution, or scheme, but a composite index derived from a survey. The data collection for the India Manufacturing PMI began in March 2005. The PMI was created to provide a timely, up-to-date, and accurate monthly indicator of economic trends, which is favored by central banks and financial markets globally.
The index is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers and 400 service sector companies. The mechanism involves calculating a diffusion index for each survey variable, where a reading above 50 indicates an overall expansion compared to the previous month, and a reading below 50 signals a contraction. The headline PMI figure is a weighted average of five key indices: New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Times (15%), and Stocks of Purchases (10%). The Suppliers' Delivery Times index is inverted for the calculation.
The HSBC PMI connects directly to the broader concepts of economic growth, inflation, and monetary policy. It is considered a leading indicator for the entire economy, offering insights into supply chain dynamics and operational challenges. The index is published monthly and is used by informed readers to anticipate changes in the Indian Rupee (INR) and to understand the current business conditions. The index has not been replaced, but the sponsorship and compilation have remained consistent, with HSBC as the sponsor and S&P Global (formerly Markit) as the compiler.