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Manufacturing activity down for 2nd straight month
Why in the news ?
- As per the Nikkei survey, India’s manufacturing sector activity eased for the second consecutive month in August, mainly on account of slower gains in output and decline in fresh orders
Details
- The decline in the manufacturing sector came after the government last week reported that the economy grew at a two-year high of 8.2 per cent in the April-June quarter of current fiscal on good show by manufacturing and farm sectors.
- The Nikkei India Manufacturing Purchasing Managers’(PMI) Index fell to 51.7 in August from 52.3 in July, as operating conditions improved at the slowest pace since May.
- This is the 13th consecutive month that the manufacturing PMI remained above the 50-point mark.
- The PMI data suggested domestic demand conditions improved at a slower pace than the preceding month, while new export orders rose at the fastest pace since February.
- On the price front, Indian manufacturing companies continued to face higher input costs during August.
- Moreover, there were reports that currency weakness contributed to higher raw material costs.
PMI
- PMI or a Purchasing Managers' Index (PMI) is an indicator of business activity -- both in the manufacturing and services sectors.
- It is a survey-based measures that asks the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- A figure above 50 denotes expansion in business activity. Anything below 50 denotes contraction. Higher the difference from this mid-point greater the expansion or contraction.
Source
Indian Express.