Industry Risk Score : PMI Manufacturing

+Outlook

  • As the economic growth outlook in the domestic market is robust, the PMI index for manufacturing also remains above 50.
  • The index has witnessed a six month high of 53.1 in June, 2018.
  • Acuité expects the index to remain at around 51.8 for the whole financial year.

+Trend

  • For past eight months, PMI index for manufacturing remain above 51.5.  
  • This leads to a positive sentiment about the performance ofthe manufacturing sector.

+Impact

  • PMI index considers the expectations of entrepreneurs based on the market trend.
  • A strong index number shows that entrepreneurs are optimistic about the market, which is a good sign for the sector.

+Rational

The Purchasing Manager Index (PMI) is a monthly survey of companies, which gives the pulse of the economy. The index includes parameters such as production level, new orders, employment level, inventories and speed of supplier deliveries. The index number above 50 indicates future outlook of the sector to be positive. Similarly, index number below 50 indicates negative future outlook. As per our analysis, PMI index is driven by the IIP and CPI in a two months lag. As the IIP index is growing relentlessly, the PMI index is also in the positive trajectory. The PMI index had previouslyposted a six month high of 53.1 in June, 2018. Given the surge, manufacturing sector is expected to witness healthy growth in the coming months.

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