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Manufacturing PMI at Four-Month Low
Jul 4, 2017

Meanwhile, more pessimistic news on the manufacturing front.

The growth in India's manufacturing sector fell to a four-month low in June amidst a slowdown in new order and production ahead of the implementation of the goods & services tax (GST). The Nikkei India Manufacturing Purchasing Managers' Index (PMI) slipped to 50.9 in June from 51.6 in May. A reading above 50 implies an expansion, while one below 50 denotes a contraction.

PMI data highlighted a slowdown in growth across India's manufacturing sector during June. As per the survey report, challenging economic conditions, water shortages and the implementation of the GST reportedly hampered growth.

However, this is not surprising given the way businesses were struggling with the GST implementation. As the 1 July deadline approached, there were reports of destocking and supply-chain disruption in various sectors. Thus, an adverse impact on production cycles was largely expected.

On a brighter side, the PMI survey showed strong foreign demand for Indian-manufactured products in June. With the impact of demonetisation largely over, Pollyanna De Lima, Economist at IHS Markit and the author of the report, does not expect GST to derail consumer spending and has forecast real GDP growth at 7.3% for 2017-18.

Data Source: IHS Markit, Nikkei

This Chart Of The Day was published in The 5 Minute WrapUp - My First Tryst with GST

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