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Manufacturing industry lifts India's economy in June

An index reading of above 50 indicates an overall increase in the economic activity

Policy Pulse
Publish Date: Jul 6 2016 11:04AM | Updated Date: Jul 6 2016 11:04AM

Manufacturing industry lifts India's economy in June

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The manufacturing industry boosted Indian economy while business activity in the service sector increased at its second lowest rate in the present 12-month period of growth in June, key macroeconomic data has showed.

Nikkei India composite PMI (purchasing managers' index) which is a macro data that shows monthly trends in overall economic activity stood at 50.3 in June, in the current 12-month sequence of above-50 readings, down from 51.0 in May.
An index reading of above 50 indicates an overall increase in the economic activity, while below 50 an overall decline.
Even though employment rose fractionally, outstanding business in June was up compared to May while faster increase in input costs contrasted with slowdown in charge inflation.
Contributing to stronger increase in private sector activity, manufacturing production sped to a three-month high.
"Although manufacturing shifted into a higher gear in June, variables such as new orders, employment and production stayed below their respective long-run averages," said Markit economist Pollyanna De Lima.
The seasonally adjusted Nikkei India Composite PMI Output Index increased from 50.9 in May to 51.1 in June.
In the reviewed month, June experienced softer rise in services new business with growth falling to the slowest in 11 months.
For the first time in five months, outstanding business for service providers rose slightly and survey participants reported delayed client payments.
According to the index, service providers observed a rise in staffing levels in June but not significantly high.
"The Indian service sector saw a further cooling of growth momentum in June, the third in consecutive months, with a weaker rise in new business leading to a softer expansion in activity," said De Lima.
Though factory employment was broadly unchanged in June, additional hiring indicated greater output requirements.
Interestingly, input prices in service sector rose for the ninth consecutive month in June, petrol and vegetables being on the higher side while rate of cost inflation was moderate, lower than the long-run trend.