PMI MANUFACTURING SLOWS TO 4-MONTH LOW IN JUNE

The fear of uncertainty over the implementation of the goods and services tax (GST) has cast its shadow on manufacturing activities, as growth in the sector fell to a four-month low in June, showed the widely-tracked Nikkei purchasing managers’ index (PMI). Water shortages in some parts of the country also led to the slowdown in growth. However, the author of the report, Pollyanna De Lima, did not expect the GST to derail consumer demand. Coupled with demonetisation’s impact largely being over, Lima projected India's economy to grow 7.3 per cent in 2017-18, a bit higher than the 7.1 per cent in the previous year.

Fear of uncertainty over the implementation of the goods and services tax (GST) has cast its shadow on manufacturing activities, as growth in the sector fell to a four-month low in June, showed the widelytracked Nikkei Purchasing Managers’ Index (PMI). Water shortages in some parts of the country also led to the slowdown in growth.

However, the author of the report, Pollyanna De Lima, did not expect the GST to derail consumer demand. Coupled with demonetisation’s impact largely being over, Lima projected India’s economy to grow 7.3 per cent in 2017-18, a bit higher than 7.1 per cent in the previous year.

Down from 51.6 points in May to 50.9 in June, the PMI pointed to a slight and weaker improvement in the health of the economy. It should be noted that the PMI in June was less than one percentage point above the 50-point mark, which demarcates expansion from contraction.

Nevertheless, the headline figure averaged 51.7 during the April to June quarter, above the one seen in Q4 FY17 (51.2).