Indian Manufacturing Activity Slower
Indian manufacturing activity contracted in December for the first time in more than two years, hurt by softening domestic demand, adding pressure on the central bank to ease policy, a business survey showed on Monday. Nikkei’s Manufacturing Purchasing Managers’ Index, compiled by Markit, fell to a 28-month low of 49.1 in December from November’s 50.3. It was also the first reading below the 50 threshold that separates growth from contraction since October 2013.
India’s manufacturing sector took a turn for the worse at the year-end, with already gloomy internal demand further hampered by floods in the south of the country,” said Pollyanna De Lima, economist at Markit. Severe rainfall and flooding caused widespread destruction in late November and early December, constraining output to its lowest since the global financial crisis.
Weak growth will likely harden expectations that the Reserve Bank of India will ease policy further by June, provided inflation is under control.