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India: Manufacturing and Services PMIs moderate in September

October 6, 2015

The Nikkei manufacturing Purchasing Managers’ Index (PMI) fell from 52.3 in August to 51.2 in September, thus hitting a seven-month low. 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, September’s moderation was driven by weaker growth in output and new orders, compared to August. New orders from outside India expanded at the slowest pace in two years amid soft global demand. In addition, employment fell and input costs dropped. However, Nikkei analysts pointed out that, “growth of Indian manufacturing production in September was weighed down by a difficult economic climate. Nonetheless, the region’s growth prospects for the July-September quarter are encouraging. According to PMI data, the manufacturing sector looks set to provide a stronger contribution to GDP than it did in the April-June quarter.”

Meanwhile, the services PMI retreated in September, decreasing from 51.8 in August to 51.3. Despite the moderation, the PMI remained in expansionary territory for the third consecutive month. According to Nikkei, the result came on the back of slower expansions in services output and new work. Nikkei added that, “service providers expect further setbacks, as highlighted by the Future Output Index sliding to its lowest mark in the history of the series. That said, the RBI continued its attempt to shift India’s growth momentum into a higher gear.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 6.4% in FY 2015, which is down 0.1 percentage points from last month’s estimate. For FY 2016, the panel expects fixed investment to increase 8.0%.


Author: Angela Bouzanis, Senior Economist

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India PMI September 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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