Q14. Consider the following statements about Index of Industrial Production (IIP) and the Manufacturing Purchasing Managers’ Index (PMI):
1. PMI is a private sector survey while the IIP is gauged by the government.
2. While the IIP is a measure of output, PMI, as the name suggests, measures activity at the purchasing or input stage.
Which of the statements are correct?
Q14. Consider the following statements about Index of Industrial Production (IIP) and the Manufacturing Purchasing Managers’ Index (PMI):
1. PMI is a private sector survey while the IIP is gauged by the government.
2. While the IIP is a measure of output, PMI, as the name suggests, measures activity at the purchasing or input stage.
Which of the statements are correct?
The correct option is C c) Both 1 and 2
Index of Industrial Production (IIP) and the Manufacturing Purchasing Managers’ Index (PMI)
There are two main points of difference between the PMI and the IIP. The first is that the PMI is a private sector survey while the IIP is gauged by the government. The second difference is in what is being measured. While the IIP is a measure of output, PMI, as the name suggests, measures activity at the purchasing or input stage.
Together the two indices provide composite and reasonably comprehensive information about the formal manufacturing sector. As with the IIP, the PMI suffers from the lacuna of not measuring informal sector activity.
Another factor to be kept in mind is that both the PMI and the IIP are based on surveys and hence, represent only a sample of the entire formal manufacturing sector. In addition, as with all surveys, the two are also susceptible to sampling errors, errors in assigning weights to various indicators and errors that creep in due to inaccurate responses.
c) Both 1 and 2
Index of Industrial Production (IIP) and the Manufacturing Purchasing Managers’ Index (PMI)
There are two main points of difference between the PMI and the IIP. The first is that the PMI is a private sector survey while the IIP is gauged by the government. The second difference is in what is being measured. While the IIP is a measure of output, PMI, as the name suggests, measures activity at the purchasing or input stage.
Together the two indices provide composite and reasonably comprehensive information about the formal manufacturing sector. As with the IIP, the PMI suffers from the lacuna of not measuring informal sector activity.
Another factor to be kept in mind is that both the PMI and the IIP are based on surveys and hence, represent only a sample of the entire formal manufacturing sector. In addition, as with all surveys, the two are also susceptible to sampling errors, errors in assigning weights to various indicators and errors that creep in due to inaccurate responses.
