Chart of the Day: India Manufacturing PMI shows optimism rising to a 16-month high
That seems to suggest that goods producers too believe that this is a cyclical slowdown which will pass in some time. Remember that the RBI has predicted that economic growth will be better from the second half of the current year itself.
Manufacturing PMI dropped to a 15-month low in August. The gauge fell to 51.4, the lowest since May 2018. The July reading was 52.5. , as most survey indicators fell signalling a widespread loss of momentum. Most PMI gauges fell in August including those for new orders, output and employment. Input buying also dropped for the first time in 15 months. This reflected a mixture of intentional reductions in stocks and shortages of available finance, said Pollyanna De Lima, the chief economist at IHS Markit.
However, optimism rose to a 16-month high. Manufacturers believed that there would be a pickup in demand in the year ahead. What gives? That seems to suggest that goods producers too believe that this is a cyclical slowdown which will pass in some time. Remember that the RBI has predicted that economic growth will be better from the second half of the current year itself. However, with the current slowdown intensifying, as seen from the first quarter GDP numbers and high frequency indicators, it remains to be seen for how long sentiment will remain high. A lot depends on the next set of measures the government announces to boost economic growth.