The PMI data suggests that the Reserve Bank of India’s (RBI) cut its policy rate by 25 basis points on Tuesday in spite of a pick-up in the economy in the September quarter.
Private sector economic activity fell back a bit in September, according to the Nikkei India Composite PMI index. The index is a measure of private sector activity in both the manufacturing and services sectors. In September, the momentum flagged a little both in the manufacturing and services sectors. As the chart shows, the seasonally adjusted composite PMI was 52.4 in September, down from the 42-month high of 54.6 in August. A reading above 50 denotes expansion from the previous month.
Nevertheless, Polyanna De Lima, economist at Markit, pointed out ‘Over Q2 FY2016/17, however, the PMI Composite Output Index posted its highest reading since the Jan-Mar 2015 quarter, thereby suggesting a pick-up in GDP growth. This would be welcome by policy makers after the below-expectations figure of +7.1% y-o-y recorded in Q1.’