India PMI January 2016

India

India: Manufacturing and Services PMIs improve in January

January 6, 2016

The manufacturing Purchasing Managers’ Index (PMI), elaborated by Nikkei and Markit, rose from 49.1 December, which had marked the lowest level since August 2013, to 51.1 in January. As a result, the PMI is now above the 50-threshold that separates expansion from contraction in business activity in the manufacturing sector.

According to Nikkei, January’s uptick was driven by recoveries in production and new orders after December’s fall due to the Chennai floods. Orders from abroad picked-up and employment increased mildly in January. Inflationary pressures increased and input costs rose during January, in part due to higher demand for raw materials.

Meanwhile, the Nikkei services PMI rose to a 19-month high in January, increasing from 53.6 in December to 54.3. As a result, the indicator rests deeper in expansionary territory. According to Nikkei, output increased in four of the six broad sectors surveyed, while the strong result was underpinned by the seventh consecutive expansion in new business inflows. Markit added that, “a strong upturn in new business is an especially positive note from January’s survey, which underpins hopes for further growth of activity across the country’s private sector in the near-term. Moreover, this upswing in demand may boost the labour market and help end the long run of subdued employment trends.”

Met the why particular Consensus Forecast panelists see fixed investment rising 6.3% in FY 2015, which is down 0.2 percentage points from last month’s estimate. For FY 2016, the panel expects fixed investment to increase 7.5%.


Author: Angela Bouzanis, Senior Economist

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India PMI January 2016

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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