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06 July 2016
Strong manufacturing industry lifted
Indian economy while business activity in the service sector rose at its second
lowest rate in the current 12-month period of growth in June, key macroeconomic
data showed on Tuesday.
The Nikkei India composite PMI
(purchasing managers' index) which is a key macro data that indicates monthly
trends in overall economic activity stood at 50.3 in June, in the current
12-month sequence of above-50 readings, down from 51.0 in May. The Total Investment & Insurance
Solutions
An index reading of above 50
indicates an overall increase in the economic activity, while below 50 an
overall decline.
Though employment rose fractionally,
outstanding business in June was up compared to May while faster increase in
input costs contrasted with slowdown in charge inflation. The Total Investment & Insurance
Solutions
Contributing to stronger increase in
private sector activity, manufacturing production sped to a three-month high.
"Although manufacturing shifted
into a higher gear in June, variables such as new orders, employment and
production stayed below their respective long-run averages," said Markit
economist Pollyanna De Lima.
The seasonally adjusted Nikkei India
Composite PMI Output Index increased from 50.9 in May to 51.1 in June.
In the reveiwed month, June
experienced softer rise in services new business with growth falling to the
slowest in 11 months.
For the first time in five months,
outstanding business for service providers increased slightly and survey
participants reported delayed client payments.
According to the index, service
providers observed a rise in staffing levels in June but not significantly
high. The Total Investment &
Insurance Solutions
"The Indian service sector saw
a further cooling of growth momentum in June, the third in consecutive months,
with a weaker rise in new business leading to a softer expansion in
activity," said De Lima.
Though factory employment was
broadly unchanged in June, additional hiring indicated greater output requirements.
Interestingly, input prices in
service sector rose for the ninth consecutive month in June, petrol and
vegetables being on the higher side while rate of cost inflation was moderate,
lower than the long-run trend.
Service providers charges however
continued to rise in June, as they passed on the higher cost burdens. The Total Investment & Insurance
Solutions
Though activity growth over the
coming year is slated to be backed by aggressive marketing campagins, concerns
on competitive pressures has been highlighted.
"Nonetheless, India remains a
leading performer within emerging markets at a time when many of its peers are
struggling," added De Lima. The
Total Investment & Insurance Solutions
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