India's Manufacturing PMI Soars to a 3-Month High of 58.6 in August
The manufacturing sector in India expanded further in August, with the S&P Global Purchasing Managers' Index (PMI) rising to a three-month high of 58.6, according to data released on September 1. In July, the manufacturing PMI was 57.7.
For the 26th month in a row, the manufacturing sector activity index
was above the key level of 50, which separates expansion from contraction.
The August manufacturing PMI comes a day after the release of April-June GDP data, which showed that the Indian economy expanded at a four-quarter high of 7.8 percent, broadly in line with expectations. The manufacturing sector, on the other hand, grew by only 4.7 percent, dragging down overall growth.
In a press conference following the release of the GDP figures, Chief
Economic Adviser V Anantha Nageswaran dismissed any suggestions of weakness in
the sector's performance, claiming that high-frequency indicators such as the
PMI "do not show that the manufacturing sector is in particular
distress."
The manufacturing PMI increased in August as new orders and output
increased at the fastest rates in nearly three years. Export orders increased
for the 17th consecutive month and to the greatest extent since November.
With demand strong, manufacturers looked to replenish stocks, with input
stocks rising at the second-fastest rate in more than 18 years of data
collection, according to S&P Global, who added that several respondents to
its survey mentioned efforts to protect against potential raw material
shortages. Reduced supplier delivery times, which fell for the sixth
consecutive month in August, aided the buildup of raw material inventory.
Manufacturers increased hiring to meet increased demand, but overall
employment rose at the slowest rate in four months. The level of input and
output inflation as measured by the manufacturing PMI survey will be closely
monitored by policymakers, given that official data shows wholesale inflation
was negative in July, despite retail inflation reaching a 15-month high of 7.44
percent.
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