PMI — Purchasing Managers' Index
A monthly survey of purchasing managers' order books, output and hiring plans, boiled into a single number — above 50 means expansion, below 50 means contraction.
Explain it like I'm 10
Imagine calling several hundred factory purchasing managers on the same day every month and asking each one a handful of simple questions: are you buying more raw materials than last month? Is your order book fuller? Are you hiring? Combine all those yes-or-no answers into a single number, and you get the PMI — a number above 50 means more managers are seeing improvement than deterioration, and below 50 means the reverse. Because it's just a quick survey rather than a full data-collection exercise, it's available within days of the month ending — weeks before official GDP or industrial production numbers are ready.
The formula
PMI is a "diffusion index": broadly, PMI = 50 + (net balance of managers reporting improvement vs decline) Recent milestones: Aug 2025 (all-time high) = 59.3 Feb 2026 = 57.5 Aug 2026 (5-year low) = 52.8
Historical data
A striking swing — from an all-time high to a five-year low within twelve months — even as the reading stayed above the 50 mark throughout, meaning the sector kept expanding the entire time, just at a rapidly decelerating pace.
Who calculates it
S&P Global compiles and releases India's Manufacturing and Services PMI monthly, based on a survey panel of purchasing managers across representative private-sector companies.
Where this number can mislead you
- ⚠PMI measures the direction and pace of change, not the absolute level of output — a reading of 52.8 means activity is still expanding, just more slowly than before, not that output actually fell.
- ⚠The survey panel skews toward larger, formal-sector businesses, so PMI may not fully capture conditions among India's vast MSME and informal-sector business community.
- ⚠PMI can diverge sharply from GDP growth in the very same period — as it did when PMI hit a five-year low even while GDP posted a strong 7.8% — so the two indicators shouldn't be assumed to always tell the same story.
- ⚠A single month's PMI print is noisy and prone to survey-sample volatility; it's generally more reliable read as a three-month trend than as a standalone monthly data point.
Reality check
Manufacturing PMI fell to 52.8 in August 2026 — a five-year low — in the very same quarter that GDP growth printed a strong 7.8%, a genuine divergence that split economists between reading PMI as an early warning of a coming slowdown and reading it as simply a narrower survey-based measure that doesn't fully capture strength visible elsewhere in the economy.
Test yourself
What does a PMI reading above 50 indicate?