India’s manufacturing PMI in February 2018
India’s manufacturing PMI (purchasing managers’ index) fell unexpectedly in February 2018. It stood at 51.2 in February as compared to 52.4 in January 2018. The reading didn’t meet the market’s expectation of 52.8 and was the weakest expansion in manufacturing activity since October 2017.
The weaker manufacturing activity in February was mainly due to the following factors:
- Production output and volume rose at a softer pace in February as compared to January 2018.
- New orders also saw the weakest rise in the past four months.
- However, employment in the manufacturing sector rose marginally in February 2018.
The weaker domestic demand is the primary factor hurting India’s manufacturing activity. The implementation of various reforms hasn’t sped up economic activity. The slight instability in the country’s political environment ahead of the next general election in 2019 is creating some nervousness among investors and is hampering investment sentiment.
Performance of ETFs
The iShares MSCI India ETF (INDA), which tracks the performance of India, fell 7.8% in February 2018. The iShares India 50 ETF (INDY), the iShares MSCI India Small-Cap ETF (SMIN), and the WisdomTree India Earnings ETF (EPI) fell 7.9%, 6.3%, and 7%, respectively, in February 2018.
In the next part of this series, we’ll analyze the performance of India’s services PMI in February 2018.