India's manufacturing PMI remains unchanged at 51.2 in Sept; IHS downgrades GDP forecast
IHS Markit downgraded its real GDP growth forecast to 6.8% for fiscal year 2017/18 as the lingering effects of recent economic shocks continue to cast a shadow on economic growth.
India Manufacturing Purchasing Managers’ Index (PMI) for the month of September remained unchanged from August at 51.2. This is the second consecutive month, when PMI registered above 50, Nikkei report showed.
However, IHS Markit downgraded its real GDP growth forecast to 6.8% for fiscal year 2017/18 as the lingering effects of recent economic shocks continue to cast a shadow on economic growth.
As per the data, increase in output and new orders sustained expansion in the Indian manufacturing sector in September. The data indicated modest improvement in the sector business conditions, and one that was below the long-run trend (54.1).
Reflecting improvements in new orders (and subsequent capacity pressures), manufacturing producers continued to increase their payroll numbers in September. In fact, the rate of employment growth quickened to the fastest since October 2012, the report added.
Aashna Dodhia, Economist at IHS Markit and author of the report, said, "September data painted an encouraging picture as the sector continued to recover from the disruptions caused by the introduction of the GST in July. This sustained amelioration reflected expansions in new work and output, supported by stronger domestic demand conditions.
"Subsequently, business confidence strengthened among manufacturers as they reportedly anticipate long-term benefits from recent government policies. This was confirmed as the sector experienced meaningful gains in employment. That said, output and new business growth remained weak in the context of historical survey data," Aashna added.
Moreover, as per the report, the introduction of GST, as well as greater prices for steel and petroleum products reportedly caused cost pressures to intensify during September.