Manufacturing PMI at Eight-Year Low - Chart Of The Day 2 August 2017 - Equitymaster

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Manufacturing PMI at Eight-Year Low
Aug 2, 2017

GST also hurt India's manufacturing sector as the new tax regime caused a marked disruption in the country's manufacturing sector. This brought the, Nikkei India Manufacturing Purchasing Managers' Index (PMI) down to 47.9 in July, its lowest since February 2009.

PMI is a monthly measure of the country's manufacturing sector output. A reading above fifty indicates expansion, while any score below the mark denotes contraction.

PMI data indicated a slowdown in new orders and manufacturing activity, with firms scaling back production in July on account of GST.

The slowdown, however, was largely expected as the imminent implementation of the new tax regime prompted destocking and supply chain disruptions across sectors fearing uncertainties about the changes.

On the bright side, the downturn is expected to be temporary as the Future Output Index, which measures manufacturers' expectations about future production, is at an eleven-month high, indicating producers are optimistic the downturn will not last. Outlook remained positive as clarity regarding GST is expected to support growth going forward.

Data Source: IHS Market, Nikkei

This Chart Of The Day was published in The 5 Minute WrapUp - The Real Reason for ITC's Stock Price Crash

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