India PMI August 2016


India: Economic conditions improve in August

September 5, 2016

Activity in India’s manufacturing sector gained steam in August. The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and IHS Markit, rose from July’s 51.8 to 52.6, the highest reading in over one-year. The PMI has remained above the 50-threshold that separates expansion from contraction since January.

A sharp pickup in new business supported August’s robust result and demand from both at home and abroad rose. In turn, output increased and some firms reported additional hiring in August, although the rate of job creation was weak. Meanwhile, price pressures remained negligible. Given low inflation, IHS Markit analysts stated that, “the RBI has scope to loosen monetary policy in the upcoming meeting to further support economic growth in India.”

Meanwhile, the Nikkei services PMI rose from July’s 51.9 to 54.7 in August, the highest level seen in over three years. The result was above the 50-threshold that indicates expansion in the sector. According to Nikkei, output rose in five of the six service provider categories surveyed and new business hit a multi-year high.

FocusEconomics Consensus Forecast panelists see fixed investment rising 5.9% in FY 2016, which is down 0.2 percentage points from last month’s estimate. For FY 2017, the panel expects fixed investment to increase 6.7%.

Author: Angela Bouzanis, Senior Economist

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India PMI Chart

India PMI August 2016 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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