India PMI March 2017


India: Economic activity strengthens in March

April 6, 2017

Activity in India’s manufacturing sector picked up in March, as the economy recovered from cash shortages resulting from demonetization. The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and IHS Markit, rose from February’s 50.7 to 52.5. As a result, the manufacturing PMI lies further above the 50-threshold that separates expansion from contraction.

March’s improvement came amid a larger volume of new orders, which contributed to accelerated output growth and a greater amount of input purchases. In addition, business confidence improved in March and firms took on staff, although job creation was marginal overall.

Meanwhile, the Nikkei services PMI also improved in March, rising from 50.3 to 51.5. After slumping to a demonetization-related near three-year low in November, the index now lies firmly in expansionary territory. According to Nikkei, a pickup in new orders and output supported activity in the sector and employment rose. Firms reported that inflationary pressures rose in March, largely due to fuel and food.

FocusEconomics Consensus Forecast panelists see fixed investment rising 5.6% in FY 2017, which is up 0.6 percentage points from last month’s estimate. For FY 2018, the panel expects fixed investment to increase 7.2%.

Author: Angela Bouzanis, Senior Economist

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India PMI Chart

India PMI March 2017

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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