Mint Quick Edit | Did PMI readings get heat struck?

The reading for the manufacturing sector also showed a decline to 57.5 from 58.8.
The reading for the manufacturing sector also showed a decline to 57.5 from 58.8.

Summary

  • The HSBC India services purchasing managers’ index (PMI) dipped to 60.2 last month from 60.8 in April and the reading for the manufacturing sector also showed a decline. Both are blamed on the hot weather that led companies to reduce working hours, while demand saw a cool-off. Is respite in sight?

The heatwave across India has hurt economic activity, with its level in both the manufacturing and service sectors recording a slowdown. According to survey results released on Thursday, the HSBC India services purchasing managers’ index (PMI) compiled by S&P Global dipped to 60.2 last month from 60.8 in April. 

The reading for the manufacturing sector, released earlier this week, also showed a decline to 57.5 from 58.8. Both are blamed on the hot weather that led companies to reduce working hours, while demand saw a cool-off. Though heatwave conditions are expected to subside, more disruptions in June when temperatures peak can’t be ruled out. That said, the indices still are well in expansionary territory (PMI readings under 50 imply a contraction).

Also read: Seasonal headwinds for India’s manufacturing sector

Further, while domestic conditions may take time to settle, overseas demand is expected to improve amid flux in global trade patterns. It’s important for both manufacturing and service businesses to explore any new export opportunities that may emerge. While India’s rapid post-pandemic output growth may suggest we are doing fine, the economy’s emergence needs far better export performance in the decades ahead.

Also read: India’s service PMI eases to five-month low in May

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