World Economy

India’s March PMI Growth Slips to Five-Month Low

India’s March PMI Growth Slips to Five-Month LowIndia’s March PMI Growth Slips to Five-Month Low

India’s economic activity grew at a snail’s pace in five months according to data from an independent business survey. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, fell to 51.0 last month from February’s 52.1.

Reuters had polled a median of 52.8. The index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease, but the month of March recorded a slump in growth, the slowest in as many as five months, SIFY reported.

“India’s manufacturing sector continued to grow, albeit at the weakest pace since October, reflecting weaker gains in new business,” Aashna Dodhia, an economist with IHS Markit, was quoted in an official release.

The growth in manufacturing sector decelerated to a five-month low in March. Companies saw shrinking orders and production growth in spite of managing to keep price of finished goods under check.

But, the deceleration resulted in slowing employment opportunities. The burdening retail inflation that remains near the Reserve Bank of India’s medium-term target of 4%, reinforces a thought that the RBI may look at a probable steady rate this year.

“PMI employment data signaled warning signs in the labor market as jobs growth was not sustained in March amid reports of spare operating capacity,” she added. According to data, companies shed staff for the first time in eight months, posing concerns for the world’s seventh-largest economy.

Besides employment, the survey has raised concerns on trade and overall economy. “Amid a slower expected pace of recovery in consumer spending, IHS Markit marginally downgraded its real GDP forecast to 7.3% for fiscal year 2017/2018,” Dodhia said.

Raghuram Rajan, the former governor had raised concerns on job creation last month. He said that India’s economic growth rate of 7.5% would not be sufficient to provide employment to the 12 million people added to the labor force every year.

Demand for India manufactured goods in overseas markets slipped to a four-month low with fears of trade war between the United States and China looming large.  

The impact of President Donald Trump’s tariffs on imports of steel and aluminum will have limited impact on India as IHS Markit said exports of the two metals to the US accounts for just 0.4% of total merchandise exports.

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