India: Economic activity uneven in May
June 5, 2017
Activity in India’s manufacturing sector moderated in May, although it stayed healthy overall. The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and IHS Markit, fell from April’s 52.5 to 51.6. However, the manufacturing PMI still lies above the crucial 50-threshold that separates expansion from contraction.
Looking at the details, the PMI reading sent mixed signals. Growing new orders underpinned production growth in May but the pace of growth was softer than in April. Firms increased buying activity, yet employment was a weak spot in the survey and jobs were shed. Meanwhile, moderate inflationary pressures were reported, while confidence climbed to a six-month high.
Meanwhile, the Nikkei services PMI improved, rising from 50.2 in April to 52.2 in May. New business inflows supported the service sector and firms took on extra staff in May. While the improvement points to stronger momentum, the PMI figure is still below the series historical average and indicates moderate growth.