Prelims 2019: Purchasing Manager’s Index (PMI) , Central Statistics Office (CSO)

Headline : Industrial output shrinks for first time in nearly 2 yrs

Details :

The News

  • According to the recent data released by the Central Statistics Office (CSO), industrial output contracted (fell 0.1%) in March 2019, the first time in nearly two years.

About Central Statistics Office (CSO):

  • The CSO is a governmental agency under the Ministry of Statistics and Programme Implementation.
  • It coordinates the statistical activities in the country and evolves statistical standards.



CSO’s divisions and various functions:

  • National Accounts Division: This division is responsible for:
    • Preparation of National Accounts which includes GDP, government and final consumption expenditure, fixed capital formation and other macro-economic aggregates
    • Bringing out annual publication titled ‘National Accounts Statsitics’ (NAS).


  • Social Statistic Division: This division is responsible for monitoring of Millennium Development Goals, grant-in-aids research etc.


  • Economic Statistic Division: This division is responsible for:
    • Conducting Economic Censuses and Annual Survey of Industries
    • Compiles All India Index of Industrial Production (IIP)
    • Compiles Energy Statistics and Infrastructure Statistics
    • Develops classifications like National Industrial Classification (NIC) and National Product Classification (NPC).

Indices complied by CSO:

  • Index of Industrial Production
  • Consumer Price Index

News Summary

  • The manufacturing sector, which accounts for over 77% of the index of industrial production (IIP), contracted 0.4% during March 2019, which is a major reason for negative Industrial output growth.
  • The CSO has estimated GDP growth for 2018-19 at 7%.
  • The latest purchasing manager’s index (PMI) also showed slow down in factory activity to an eight-month low in April 2019.


Reasons for slowdown:

  • Tepid Consumer goods growth (both durable and non-durable)
  • Slowdown in Capital Goods Sector
  • Decrease in Private investment.
  • Subdued Consumer Spending


About Purchasing Manager’s Index (PMI)

  • PMI or a Purchasing Managers’ Index (PMI) is an indicator of business activity both in the manufacturing and services sectors.
  • For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.
  • It is a survey-based measure which receives the inputs from 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.
  • The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
  • It is, therefore, considered a good leading indicator of economic activity.
  • Note: Manufacturing growth measured by PMI is considered good indicator of industrial output.


Section : Economics