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October production growth falls to 22-month low: PMI
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SME Times News Bureau | 05 Nov, 2015
Country's manufacturing sector growth waned further and touched a 22-month low
in October largely due to a slower increase in new orders, a leading
international business survey showed on Monday.
Revealing the
weakest purchasing activity since December 2013, the Nikkei India
Manufacturing Purchasing Managers Index (PMI) recorded an eight-month
low in October at 50.7, down from 51.2 in September and from 52.3 in
August.
According to the PMI report published by financial
information services provider Markit, in which a value above 50 in the
reading index indicates an overall increase in manufacturing and below
50 an overall decrease, expansion in production and order books were the
weakest in their current 24-month growth sequence.
"Rates of
expansion in both production and order books were the weakest in their
current 24-month sequences of growth, with panellists reporting
challenging economic conditions and a reluctance among clients to commit
to new projects," the report said.
"PMI data for October show a
further loss of growth momentum across the Indian manufacturing
economy, with a slower rise in new business inflows resulting in a
weaker expansion of output," said Pollyanna De Lima, economist at Markit
and the report's author.
Despite the slowdown in new order
growth, manufacturers recruited additional workers in October.
Employment rose only marginally for the first time since January.
"Undeterred
by tough economic conditions overall, firms took extra staff in
October. This, combined with a further drop in inventories of finished
goods, suggests that production growth may rebound in coming months,"
Lima said.
The report said October saw inflationary pressures
return to India's manufacturing economy. Average purchase costs rose,
though the rate of increase was "slight", the survey said.
Part of the additional cost was passed on to clients by raising tariffs.
"A
return to inflationary pressures, meanwhile, indicates that RBI may
pause its loosening cycle for the rest of the year following a 50 basis
points cut of the key repo rate in September," Lima said.
"Upcoming
survey data will show how effective the central bank's effort to
revive the economy has been," Reserve Bank of India Governor Raghuram
Rajan on September 29 cut the RBI's repo rate, at which it lends to
commercial banks, to 6.75 percent making it the third cut in the bank's
short-term lending rate this year.
The RBI has also lowered its
GDP growth forecast for the current fiscal to 7.4 percent, from its
earlier projection of 7.6 percent.
Under the PMI, the
manufacturing sector is divided into 8 broad categories of basic metals,
chemicals and plastics, electrical and optical, food and drink,
mechanical engineering, textiles and clothing, timber and paper and
transport.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
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56.85 |
As on 13 Aug, 2022 |
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