With reference to the Purchasing Managers rsquo Index PMI recently seen in news consider the followi...........

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With reference to the Purchasing Managers’ Index (PMI), recently seen in news, consider the following statements.

PMI is an indicator of business activity-both in the manufacturing and services sectors.
It is a survey-based measure that asks respondents about changes in their perception of some key business variables from month before.
PMI excludes import-export data to firm to reflect domestic preferences of manager and industrialists.

Select the correct answer using the codes below.

1 only

1 and 2 only

1 and 3 only

2 and 3 only

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Explanation:

Statement 1: It is calculated separately for manufacturing and services sectors and then composite index is constructed. But the manufacturing sector holds more importance. It is different from IIP.

Statement 2: PMI is usually released at start of month, much before most of official data on industrial output, manufacturing and GDP growth is made available. It is, therefore, considered a good leading indicator of economic activity. Manufacturing growth measured by PMI is considered good indicator of industrial output.

Statement 3: The variables used to construct India’s PMI are: Output, New Orders, Employment, Input Costs, Output Prices, Backlogs of Work, Export Orders, Quantity of Purchases, Suppliers Delivery Times, Stocks of Purchases and Stocks of Finished Goods. Similar variables (but less in number) are used for the construction of services PMI. The PMI is very closely watched, as it shows the investor sentiment in an economy’s manufacturing sector.