India PMI February 2017

India

India: Economic activity rallies in February

March 3, 2017

Activity in India’s manufacturing sector continued to rally in February, as the economy recovered from cash shortages resulting from demonetization. The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and IHS Markit, inched up from January’s 50.4 to 50.7. As a result, the manufacturing PMI remains above the 50-threshold that separates expansion from contraction.

Output and new orders rose at a faster pace in February, fueling the overall improvement of the index. Evidence pointed to a return to normal business conditions in India, after last year’s cash crunch led to a downturn in December. Despite the better business environment, conditions in the labor market once again failed to improve.

Meanwhile, the Nikkei services PMI also improved in February, rising from January’s 48.7 to 50.3. After slumping to a demonetization-related near three-year low in November, the index returned to expansionary territory in February. According to Nikkei, a pickup in demand helped the sector. Inflationary pressures, however, sent input prices climbing and firms were forced to raise their prices.

FocusEconomics Consensus Forecast panelists see fixed investment rising 0.6% in FY 2016, which is down 1.4 percentage points from last month’s estimate. For FY 2017, the panel expects fixed investment to increase 5.0%, which is down 0.9 percentage points from last month’s forecast.


Author:, Economist

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India PMI February 2017 0

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 IHS Markit.


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