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The country's manufacturing sector saw a
significant uptrend in July registering the highest reading since April this
year, as both production and new orders rose, a key macro-economic data showed
on Monday.
The Nikkei India Manufacturing Purchasing
Managers' Index (PMI) -- a composite indicator of manufacturing performance --
rose to 51.8 in July from 51.7 in June.
An index reading of above 50 indicates an
overall increase in the economic activity, and below 50, an overall decrease.
According to the financial services firm IHS
Markit, which compiles the monthly report, India's manufacturing economy
revived at the beginning of the second half of 2016 after the slowdown seen in
the April-June quarter, as growth of both production and new orders continued
to strengthen in July.
"Although output expanded at the fastest
rate since March and backlog accumulation intensified, businesses refrained
from creating jobs. The ongoing muted trend for employment indicates that
companies remain somewhat uncertain regarding the sustainability of the
upturn," said Pollyanna De Lima, economist at Markit and author of the
report.
Delving deeper into the data we see that the
consumer goods sub-sector kept its place as the prime driver of the overall
upturn. Although demand for plant and machinery improved, investment goods
output dropped, De Lima said.
"Separately, the depreciation of the
rupee supported Indian exporters as survey data pointed to the quickest rise in
new business from abroad since January," she said. The Total Investment &
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De Lima said that offering respite to firms,
cost burdens rose at a modest and slower rate and the improving demand
environment meant that businesses were able to raise their own charges in July. The Total Investment &
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"With inflation rates remaining lower
than their respective long-run averages, it wouldn't be surprising to see the
RBI (Reserve Bank of India) loosening monetary policy at its August meeting in
an effort to encourage investment," she added.
The Indian economy grew at 7.9% in the fourth
quarter of 2015-16, taking the overall GDP growth to 7.6% for the entire
fiscal. The
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