UPSC Prelims Practice Questions — Manufacturing PMI eases in Oct., export orders hit high

Q1. With reference to the Purchasing Managers' Index (PMI) as a measure of manufacturing activity, consider the following statements: Which of the statements given above is/are correct?

  1. It measures the percentage change in the volume of manufacturing output over the previous month.
  2. A reading of exactly 50 indicates that activity is unchanged from the previous month.
  3. It reflects how widespread an improvement or deterioration is across surveyed firms rather than the size of the change at any single firm.
  • A. 2 and 3 only
  • B. 1 and 2 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q2. Consider the following pairs: Indicator — Nature of the indicator. Which of the pairs given above is/are correctly matched?

  1. Purchasing Managers' Index — Survey of firms on the direction of change in business conditions
  2. Index of Industrial Production — Volume index of industrial output measured against a base year
  3. Index of Eight Core Industries — Sentiment index of business expectations among infrastructure firms
  4. Index of Eight Core Industries — Set of industries whose output also carries weight within the IIP
  • A. 2, 3 and 4 only
  • B. 1, 2 and 4 only
  • C. 1, 2, 3 and 4
  • D. 1 and 2 only

Q3. With reference to leading and lagging indicators of economic activity, consider the following statements: Which of the statements given above is/are correct?

  1. The new orders component of the manufacturing PMI is regarded as a leading indicator, as orders received now are typically executed through production in later periods.
  2. The unemployment rate is generally regarded as a leading indicator, as firms tend to cut jobs well before their output begins to fall.
  3. Because the PMI for a month is released earlier than the IIP for that month, it is also the more comprehensive measure of industrial output.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1 and 2 only
  • D. 1 only

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Although it is not an official statistic, the manufacturing PMI is closely tracked by the Reserve Bank of India and financial markets as a gauge of economic momentum.
  2. The PMI for a month is published within days of that month's end, well before official industrial production estimates for the same month become available.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. Consider the following facts about India's manufacturing sector in October 2026: the headline manufacturing PMI eased from 55.1 to 54.7; new orders rose strongly; and the sub-index for new export orders reached its highest level in six months. Which of the following inferences can validly be drawn from the above?

  1. India's merchandise trade deficit narrowed in October 2026.
  2. Demand from foreign buyers for Indian manufactured goods strengthened compared with recent months.
  3. Manufacturing output in October 2026 was lower than in September 2026.
  4. On balance, more surveyed manufacturers reported an increase in new orders than reported a decrease.
  • A. 3 and 4 only
  • B. 1, 2 and 4 only
  • C. 2 and 4 only
  • D. 1 and 2 only

Q6. Consider the following assertion: 'The strong rise in new orders reported in the October 2026 manufacturing PMI suggests that manufacturing activity is likely to remain in expansion in the coming months.' Which of the statements given below support/supports the above assertion?

  1. Orders received by manufacturers in a month are typically fulfilled through production in subsequent periods.
  2. New export orders in October 2026 reached their highest level in six months.
  3. The headline manufacturing PMI in October 2026 was lower than the seven-month high recorded in September 2026.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q7. Consider the following assertion: 'The manufacturing PMI and the Index of Industrial Production (IIP) for the same month can send different signals about the direction of industrial activity.' Which of the statements given below support/supports the above assertion?

  1. The PMI records how widespread a change is among surveyed firms, whereas the IIP measures the volume of output.
  2. The PMI compares conditions with the previous month, whereas IIP growth is commonly reported against the same month of the previous year.
  3. The PMI is based on a sample panel of private firms, whereas the IIP seeks to cover industrial production across a wide set of item groups.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 1 only