Brain Booster for UPSC & State PCS Examination (Topic: Purchasing Managers Index and NIBRI)

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Purchasing Managers Index and NIBRI

Business activity in India’s manufacturing sector surged to its highest level in 13 years. The seasonally adjusted headline of Nikkei Manufacturing Purchasing Managers’ Index (PMI) , compiled by IHS Markit, rose from 56.8 in September to 58.9 in October.
The Nomura India Business Resumption Index (NIBRI) increased to 84.4 for the week ending November 1, the highest value since the imposition of the lockdown; 100 indicates prepandemic levels of economic activity.

India's factory activity expanded at its fastest pace in over a decade in October as demand and output continued to recover strongly from coronavirus-related disruptions.
Asia's third-largest economy is healing after shrinking a record 23.9% in the April-June quarter.
The gradual reopening of the economy and restocking ahead of the festive season has aided the recovery. The October reading was the highest since 2008
The sharp recovery was aided by a revival in exports. New export orders rose from 53.8 in September to 55.2 in October.
The rural economy appears to be relatively more robust than the urban economy thanks to the higher allocations for employment guarantee schemes, larger fiscal spends, a reasonably good rabi harvest and a spike in waged until May.

After a sharp contraction, businesses are bound to see an improvement as the economy opens up. Concerns on high unemployment and rising income inequality remain.
With the International Monetary Fund (IMF) projecting a fall in India’s per capita income, the outlook on demand remains dull. The extent of durable damage that this pandemic has done to the Indian economy is still not known.
Firms are reducing staff for the seventh month in a row, a streak not witnessed since the survey began in 2005, signaling a quick recovery in the consumer-driven economy may be a distant possibility.
Input and output prices increased at a faster pace last month, although most of the burden of rising price pressures was carried by firms.
That could lead overall retail inflation, which rose to an eight-month high of 7.34% in September, to remain above the Reserve Bank of India‘s medium-term target of 2-6% in coming months, reducing the chances of further easing by the central bank.

The Purchasing Managers' Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors.
It consists of a diffusion index that summarizes whether market conditions, as viewed by purchasing managers, are expanding, staying the same, or contracting.
The purpose of the PMI is to provide information about current and future business conditions to company decision makers, analysts, and investors.
Nomura had cautioned against a “faux recovery” restricted to a festive demand-led pick up in various indicators
The Nomura India Business Resumption Index (NIBRI) is a weekly tracker of the pace at which the economic activity normalizes.

The only long-term driver of sustained economic growth is demand. It is on this front that uncertainty remains.
October and November could see a one-time boost in spending because of the festive demand.
A good kharif harvest, which is already underway in most parts of the country, could signal a sustained rural boost to demand in the economy.
There is also the question of the employment generation ability of the ongoing sequential recovery.