Core sector grows 5.2% in June, PMI at 4-month high in July

index.jpgSource: The Economic Times of India, Aug 02, 2016

NEW DELHI: India’s manufacturing and infrastructure sectors are on a recovery path, two sets of data released on Monday suggested. While a private survey showed manufacturing activity grew at its fastest pace in four months in July, government data on eight core industries revealed a 5.2% expansion in June, compared with 2.8% in May and 3.1% in the year-earlier month.

The seasonally adjusted Nikkei India Manufacturing Purchasing Managers Index edged higher in July, to 51.8 from 51.7 in June, led by higher sales, new orders for consumer goods and exports encouraged by the rupee’s depreciation. A reading above 50 indicates expansion, while a number below shows contraction.

“India’s manufacturing economy is reviving 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 continues to strengthen in July,” said Pollyanna De Lima, economist at Markit and author of the PMI report.

The trend was reaffirmed by the core sector, which has a 38% weight in the Index of Industrial Production. “The combination of higher growth of the core sector industries, auto production as well as nonoil merchandise exports augur well for a somewhat firmer industrial expansion in June 2016, as compared to the 1.2% rise in May 2016,” said Aditi Nayar, senior economist at ratings firm ICRA.

Coal output grew the fastest at 12%, a 19-month high, followed by cement that posted 10.3% growth in production.

The positive data are likely to reflect in the June IIP numbers, set to be released next week by the government’s statistics office.Crude oil and natural gas were the only two sectors where production declined in June, by 4.3% and 4.5%, respectively.

Refinery production increased 3.5% and steel output grew 2.4%. Electricity production expanded 8.1%.

Fertiliser production, which has been rising for more than a year, continued with the northward trend with 9.8% growth.

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