Manufacturing Index Shows a Drop in September

Manufacturing Index Shows a Drop in September

The country’s manufacturing growth has lost momentum with the Nikkei India Manufacturing Purchasing Managers’ Index (PMI), a measure of manufacturing performance, falling to 52.1 in September from 52.6 in August.

This Manufacturing output report came just ahead of the RBI’s monetary policy review which is scheduled today, on October 4 and amid India Inc. demand for an interest rate cut even as the central bank has had concerns over rising inflation.

An index reading above 50 indicates an expansion, while a reading below 50 shows an overall decrease or contraction.

Pollyanna De Lima, Economist at IHS Markit and author of the report, said: “The Indian manufacturing industry lost momentum in September, as (the) growth of new orders eased from August’s 20-month high.”

Ms. De Lima said, however, (the) output is still rising at a decent clip and the sector looks likely to have delivered a stronger contribution to GDP growth in Q2 2016-17, with the quarterly reading for the PMI’s Output Index up from 51.4 during April-June to 53.6.

Although inflation rates edged higher, these remain weak by historical standards and indicate that one may still see the RBI loosening monetary policy in 2016, Ms. De Lima added.

The latest PMI figures also showed an intensification of inflationary pressures, a Nikkei-IHS Markit statement said, adding that both input costs and output charges increased at quicker rates. Even manufacturing growth rate fell, the headline PMI posted above the crucial 50.0 threshold for the ninth consecutive month. Foreign new orders for Indian-manufactured goods expanded markedly in September, and at the quickest rate in 14 months, the statement said.