India PMI


Manufacturing PMI moderates while Services PMI improves in August

The Nikkei manufacturing Purchasing Managers’ Index (PMI) fell from 52.7 in July, which had marked a six-month high, to 52.3 in August. Despite the fall, the PMI remains above the 50-threshold that separates expansion from contraction in business activity in the manufacturing sector.

According to Nikkei, August’s moderation was driven by weaker growth in output and new orders, compared to July. However, the moderation was slight overall, and output still expanded at a solid pace. Moreover, employment was stable in August. Input costs fell for the first time in six months largely due to lower prices for metals, plastics, chemicals and petroleum-based prices. Nikkei pointed out that, “falling global commodity prices resulted in an overall reduction in cost burdens. This provided companies with more room for price negotiations and tariffs were lowered on average. As inflation concerns fade and demand growth loses momentum, further accommodative policy should not be discounted.”

Meanwhile, the services PMI rose in August, increasing from 50.8 in July to 51.8. As a result, the PMI remained in expansionary territory for the second consecutive month. According to Nikkei, the result came on the back of a rise in new work while job creation stagnated in August. Nikkei added that, “both manufacturers and service providers left payroll numbers unchanged in August, with significant job creation not seen since early 2014. While the path ahead for the economy looks unclear, firms’ reluctance to hire persists.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 6.5% in FY 2015, which is unchanged from last month’s estimate. For FY 2016, the panel expects fixed investment to increase 8.4%.

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India PMI Chart

India PMI August 2015

Note: Nikkei India Purchasing Managers’ Index (PMI). A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: Nikkei and Markit.

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