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Growth in Services sector : PMI Survey
Why in the news ?
- As per the PMI survey, business activity in service sector witnessed the strongest growth since October 2016, amid improved demand conditions.
Details
- The Nikkei India Services Business Activity Index rose from 52.6 in June to
- 54.2 in July, as new business rose at the fastest pace since June 2017.
- Amid reports of improved demand conditions, business confidence towards the 12month outlook picked up from June’s recent low.
- Subsequently, firms raised their staffing levels at the strongest pace since April.
- The Nikkei India Composite PMI Output Index, that maps both the manufacturing and services sectors, rose from 53.3 in June to 54.1 in July.Inflation concern :
- There are some warning signs reflected by PMI price data.
- Although overall input cost inflation softened from June’s near four year high, service companies faced the fastest rise in input costs since March amid reports of high oil prices.
- An uncertain global climate, currency weakness and strong inflation may continue to place pressure on the central bank to hike interest rates over the coming months
What is PMI index ?
- PMI or a Purchasing Managers' Index (PMI) is an indicator of business activity - both in the manufacturing and services sectors.
- It is a survey-based measures that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction. Higher the difference from this mid-point greater the expansion or contraction.
Source
The Hindu.