Manufacturing activity in India slowed to a seven month low in September as lower demand dampened output.
The Reserve Bank of India (RBI) cut its policy rate by a more than expected 0.5 percentage points to provide a demand stimulus to the economy. The Nikkei Manufacturing Purchasing Managers' Index declined to 51.2 in September from 52.3 in August.
A reading above 50 on this survey based index indicates expansion.
The tepid car sales in September seem to validate the lower reading.Market leader Maruti Suzuki reported 6.8% rise in sales in September. The official data has showed improving manufacturing in recent months. According to the Index of Industrial Production (IIP) numbers, manufacturing output rose 4.7% in July. The data for August will be released on October 12. India's GDP growth slowed to 7% in the quarter to June from 7.5% in the previous quarter. The government has already spent nearly 40% of its capital budget for the year by the end of August, hoping to restart the investment cycle.
The RBI has downgraded its growth estimate for the fiscal to 7.4% from 7.6%.
The PMI numbers suggest the second quarter was better than the previous one with an average of 52.1, marginally ahead of 51.8 for the April-June quarter. The new orders sub-index of the PMI dropped to a three month low. The sub-index for output fell to its lowest since May 2014.
The survey confirmed a subdued inflation outlook, validating the RBI's decision to cut rates.
The sub-index for input prices declined to its lowest since February 2009 because of lower commodity prices. Most manufacturers passed on these cuts to consumers.
The Reserve Bank of India (RBI) cut its policy rate by a more than expected 0.5 percentage points to provide a demand stimulus to the economy. The Nikkei Manufacturing Purchasing Managers' Index declined to 51.2 in September from 52.3 in August.
A reading above 50 on this survey based index indicates expansion.
The tepid car sales in September seem to validate the lower reading.Market leader Maruti Suzuki reported 6.8% rise in sales in September. The official data has showed improving manufacturing in recent months. According to the Index of Industrial Production (IIP) numbers, manufacturing output rose 4.7% in July. The data for August will be released on October 12. India's GDP growth slowed to 7% in the quarter to June from 7.5% in the previous quarter. The government has already spent nearly 40% of its capital budget for the year by the end of August, hoping to restart the investment cycle.
The RBI has downgraded its growth estimate for the fiscal to 7.4% from 7.6%.
The PMI numbers suggest the second quarter was better than the previous one with an average of 52.1, marginally ahead of 51.8 for the April-June quarter. The new orders sub-index of the PMI dropped to a three month low. The sub-index for output fell to its lowest since May 2014.
The survey confirmed a subdued inflation outlook, validating the RBI's decision to cut rates.
The sub-index for input prices declined to its lowest since February 2009 because of lower commodity prices. Most manufacturers passed on these cuts to consumers.
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