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India: Services PMI rises while manufacturing PMI falls to almost two-year-low in October

November 4, 2015

The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, fell from 51.2 in September to 50.7 in October, thus hitting the lowest level since December 2013. As a result, the PMI is closer to the 50-threshold that separates expansion from contraction in business activity in the manufacturing sector.

According to Nikkei, October’s moderation was driven by the weakest expansion in output in two years. In addition, new orders expanded at a more moderate pace than in the previous month. However, employment was a bright spot in the survey and recorded its first rise since January. Regarding prices, average purchase costs rose amid a rise in inflationary pressures; however, the increase was slight overall. Markit analysts pointed out that, “a return to inflationary pressures, meanwhile, indicates that the RBI may pause its loosening cycle for the rest of the year following a 50 bps cut to the key repo rate in September. Upcoming survey data will show how effective the central bank’s effort to revive the economy has been.”

Meanwhile, the Nikkei services PMI improved in October, rising from 51.3 in September to 53.2, thus hitting an eight-month high and remaining in expansionary territory for the fourth consecutive month. According to Nikkei, the result came on the back of a more pronounced rise in new business inflows. Markit added that, “services companies saw a faster rise in new business than their manufacturing counterparts, with data implying that price discounts supported growth of new projects.”

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 October 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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