India’s manufacturing sector rebounds in August

The overall health of India’s manufacturing sector improved in August due to resumed growth of new orders, production and employment, a key macro-economic data showed on Friday.

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI), which is a composite indicator of manufacturing performance, stood at 51.2 in August, up from the index reading of 47.9 reported in July — signalling “a renewed improvement in the health of the sector”.

An index reading of above 50 indicates an overall increase in economic activity, and below 50 an overall decrease.

“August’s PMI results showed that manufacturers in India recovered quickly from the sharp slump that followed the introduction of the GST,” said Pollyanna De Lima, Principal Economist at IHS Markit and the author of the report.

“In July, firms indicated that orders, production and purchasing had been postponed due to lack of clarity about the new tax regime, but they have now been resumed as manufacturers, suppliers and their clients have become more knowledgeable of the GST rates.”

“All sub-sectors posted substantial recoveries, with capital goods outperforming its consumer and intermediate goods counterparts regarding growth rates for production.”

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