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India: Manufacturing PMI falls to over-two-year low and Services PMI drops in November

December 4, 2015

The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, fell from 50.7 in October to 50.3 in November, thus hitting the lowest level since October 2013. As a result, the PMI is just above the 50-threshold that separates expansion from contraction in business activity in the manufacturing sector.

According to Nikkei, November’s moderation was driven by weaker expansions in output and new orders. In addition, subdued demand caused firms to keep payroll numbers broadly stable. However, new orders from abroad picked-up pace in November. Regarding prices, input cost inflation hit a six-month high in November, but still remains low in an historical context. Markit analysts pointed out that, “November PMI data point to tepid manufacturing growth across India, with gloomy domestic demand resulting in the weakest expansion in production for 25 months. Signs of the sector slowing have been building up, as growth of both new orders and output has eased in each of the past four months. The disappointing news is accompanied by a stagnant labour market in the sector.”

Meanwhile, the Nikkei services PMI dropped in November, falling from 53.2 to 50.1. As a result, the indicator barely lies in expansionary territory. According to Nikkei, the result came on the back of the slowest growth in new work since July. In addition, order book volumes increased at a softer rate. Markit added that, “following an improvement in the prior month, India’s economic growth moved closer to stagnation in November. Gloomy PMI data show a broad-based weakness in output, with little prospect of a rebound apparent in the near term.”

FocusEconomics Consensus Forecast panelists see fixed investment rising 6.4% in FY 2015, which is unchanged from last month’s estimate. For FY 2016, the panel expects fixed investment to increase 7.6%.


Author: Angela Bouzanis, Senior Economist

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India PMI November 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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