A recent survey conducted by Nikkei India observed that the country’s Purchasing Managers Index (PMI) fell to a 5 month low in March 2018. The PMI reduced to 51.0 in March which was at 52.1 in February. The survey says that the manufacturing sector got better for the eight consecutive, yet at a very slow pace observed since last October.
The recent inflation had a significant impact on the business orders and recruitment activities in firms. As per PMI, a mark above 50 is considered to be an expansion and a contraction if it is lower than 50. Aashna Dodhia, Economist at IHS Markit reported that this decline in new businesses and employment was observed for the first time in eight months.
IHS Markit dragged its real GDP forecast down to 7.3% for FY18, after the anticipated slow improvement in consumer expenditures. Aashna further said that manufacturers functioning in mid-sector economy showed no requirement of employers which was an alarm for the labor market. The survey also revealed that because of the rising fears of a trade war between US and China, the international demand for Indian goods reduced to a 4 month low.
Aashna also informed that since India’s exports of Steel and Aluminium to the US contributed to less than 0.4% of the entire merchandise exports, they do not expect much impact of the US tariffs on both metals on India.