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India’s Manufacturing PMI remains stable in February

01 Mar 2016 Evaluate

India’s manufacturing sector growth expanded for a second consecutive month in February at a stable pace driven by new orders, exports, output and purchasing activity all rising in the month. However, a faster expansion in new business inflows failed to lift growth of output. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) held steady at 51.1 in February, same as January’s reading after it fell below that level in December for the first time in over two years. A figure above 50 represents expansion while a reading below this level means contraction.

According to the survey, new orders expanded at their fastest pace in five months in February, with the sub-index rising to 52.3 from 51.7. Foreign demand also rose, though at a slower pace. On the price front, input prices climbed for the fifth month running in February but at the weakest pace in that time, while factory gate prices fell for the first time since September. Employment contracted slightly in February, after hovering just above the 50-mark in the previous four months.

The survey further highlighted that the manufacturers raised their production volumes in February, but, the rate of expansion eased from the preceding month. While underlying demand continued to improve and new business from abroad also rose, February saw a loss of growth momentum. For the first time in five months in February firms lowered their selling prices, underpinned by a softer increase in input costs and as part of efforts to secure new work.

In the month of February, goods producers continue to benefit from lower crude oil prices in global markets, which put a brake on inflationary pressures. In light of these numbers, the RBI has scope to loosen monetary policy to spur the economy.

 

 

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