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India: Manufacturing and Services PMIs decrease in June

July 3, 2015

The Nikkei manufacturing Purchasing Managers’ Index (PMI) fell from 52.6 in May to 51.3 in June. 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, the June’s decrease was driven by a more moderate increase in output growth compared to the previous month. The result was largely driven by the weakest increase in new work since September 2014. Employment was largely unchanged in June and payroll costs continued to remain broadly stable. Input price inflation eased slightly in June, and remains weaker than the series average. Nikkei pointed out that, “with price pressures being weak and growth losing steam, June’s dataset suggests that the RBI’s loosening cycle is, therefore, likely to continue.”

Meanwhile, the services PMI fell from 49.6 in May to 47.7 in June, which marked a 15-month low. The PMI indicates that business activity in services is contracting. According to Nikkei, the result came on the back of a decline in new work and a moderate increase in job creation. Nikkei added that, “the heatwave and competitive pressures were again reported to have weighed on service providers’ performance. However, companies are hopeful of turning the corner in coming months, with confidence regarding the 12-month outlook remaining strong.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 6.5% in FY 2015/2016, which is up 0.2 percentage points from last month’s estimate. For FY 2016/2017, the panel expects fixed investment to increase 8.2%.


Author: Angela Bouzanis, Senior Economist

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India PMI June 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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