Why India’s Manufacturing PMI Improved
India’s manufacturing PMI in August
India’s manufacturing PMI stood at 51.2 in August as compared to 47.9 in July. It beat the preliminary market expectations of 49.3. The manufacturing PMI showed a stronger move in August 2017.
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Manufacturing PMI was in the expansion zone in August as compared to the contraction zone in July. A level above 50 indicates expansion in activity while a level below 50 indicates a contraction in activity.
The manufacturing PMI in August was mainly due to the following reasons:
- Production volume rose at a stronger pace in August 2017.
- New order growth also rose at a stronger rate in August 2017.
- The employment in the manufacturing sector also grew at a higher rate in August 2017 and it was the highest since March 2013.
Business sentiment in India (INDA) improved after a huge fall in July. In July 2017, the Indian government implemented its much-awaited GST (goods and service tax) tax reform. Market participants’ uncertainty about the implementation of this tax policy dragged down the overall business sentiment in July.
Performance of various ETFs in August
The iShares MSCI India ETF (INDA), which tracks the performance of India, fell nearly 0.7% in August 2017, while the SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index (IWM) (QQQ), rose nearly 0.3% in August 2017.
In the next part of this series, we’ll analyze the performance of India’s services PMI in August 2017.