Manufacturing sector growth went down to four month-low in June

Manufacturing sector growth went down to four month-low in June
The Siliconreview
15 July, 2017

According to a monthly survey showed recently, regeneration rate cut call. The Manufacturing development eased to a four-month low in June due to weak client demand, water scarcity and concerns related to GST.

Though, the foreign command for India-manufactured goods enhanced in June, with new export orders touching at the rapid speed since October 2016.

The Nikkei India Manufacturing Purchasing Managers' Index (PMI) cut down to a four-month low of 50.9 in June, from 51.6 in May, signaling a cowed improvement in the manufacturing sector. However, in the month of February, the manufacturing PMI read 50.7.

"The slowdown occurred due to weak client demand, with orderbooks up at a slight and softer pace. In many cases, businesses indicated that growth was held back as a reflection of water scarcity and... the Goods and Services Tax (GST)," said Pollyanna De Lima, Economist at IHS Markit and author of the report.

"On a more cheerful pitch, the PMI survey showed strong foreign demand for Indian-manufactured products in June. New orders from external markets increased at a solid rate that was the most pronounced in eight months," Lima added.

In the meantime, the assurance towards future recital continued mixed among goods producers. While the new tax system is predictable by some companies to create more business, others feel that GST will have a harmful blow on orderbooks.

"As such, overall optimism slipped to a three-month low," Lima said.

The manufacturing PMI averaged 51.7 during the April-June quarter, above the one seen in the previous quarter.

"With the impact of demonetisation largely over and the GST unlikely to substantially derail consumer spending, IHS Markit forecast real GDP growth to hit 7.3 per cent for 2017- 18 as a whole," Lima said.

Further, as per the survey payroll numbers and purchasing activity increased only marginally. While on the price front, there were few signs of inflationary pressure trailing speed as input costs rise to a lesser level than in May.

In the financial policy review on June 7, the RBI left key rates unchanged with Governor Urjit Patel noting that the central bank wanted to be more sure that inflation will stay subdued.