You are here: Home » Reuters » News
Business Standard

Manufacturing activity cools in November on cash crunch - PMI

Reuters  |  BENGALURU, 

BENGALURU, (Reuters) - Indian factory activity decelerated sharply last month after Prime Minister Modi's currency crackdown led to a rationing of and cooled domestic consumption, new orders and production.

The Nikkei/Markit Manufacturing Purchasing Managers' Index fell to 52.3 in November from October's 54.4, its biggest month-on-month decline since March 2013.

However, it held above the 50 mark that denotes growth for the eleventh straight month.

"data for November showed that the sudden withdrawal of high-value banknotes in caused problems for manufacturers, as shortages hampered growth of new work, buying activity and production," said Pollyanna De Lima, economist at survey compiler IHS Markit.

The new orders sub index that measures both foreign and domestic demand was knocked down to 53.3 from 57.7 in October, the largest monthly fall in over 4-1/2 years.

Modi's decision last month to scrap 500 and 1,000 rupee banknotes as part of a crackdown on tax dodgers and counterfeiters removed 86 percent of the currency in circulation virtually overnight.

That left banks flush with but knocked consumption and investment and led to markets calling for aggressive rate cuts from the RBI to support demand.

Slowing demand in the world's fastest growing major could undermine growth in coming quarters especially as factories have already started cutting output.

India's $2 trillion picked up pace between July to September compared to the previous three months, growing 7.3 percent against expectations of 7.5 percent expansion in a Reuters poll, official data showed on Wednesday.

But cooling price pressures, as reflected in the latest where both input and output price rises decelerated, may act as a temporary relief and provide room for the Reserve Bank of to cut interest rates further.

"Of respite to firms, cost inflationary pressures softened, which in turn encouraged the vast majority of businesses to keep their selling prices unchanged. If this trend is sustained we will likely see further cuts to the benchmark rate," De Lima said.

Indian consumer inflation eased for a third straight month in October to 4.2 percent, helped by smaller rises in food prices.

(Reporting by Purnita Deb; Editing by Shri Navaratnam; purnita.deb@thomsonreuters.com; +91-80-6749-6735; Reuters Messaging: purnita.deb.thomsonreuters.com@reuters.net)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU

Manufacturing activity cools in November on cash crunch - PMI

BENGALURU, (Reuters) - Indian factory activity decelerated sharply last month after Prime Minister Narendra Modi's currency crackdown led to a rationing of cash and cooled domestic consumption, new orders and production.

BENGALURU, (Reuters) - Indian factory activity decelerated sharply last month after Prime Minister Modi's currency crackdown led to a rationing of and cooled domestic consumption, new orders and production.

The Nikkei/Markit Manufacturing Purchasing Managers' Index fell to 52.3 in November from October's 54.4, its biggest month-on-month decline since March 2013.

However, it held above the 50 mark that denotes growth for the eleventh straight month.

"data for November showed that the sudden withdrawal of high-value banknotes in caused problems for manufacturers, as shortages hampered growth of new work, buying activity and production," said Pollyanna De Lima, economist at survey compiler IHS Markit.

The new orders sub index that measures both foreign and domestic demand was knocked down to 53.3 from 57.7 in October, the largest monthly fall in over 4-1/2 years.

Modi's decision last month to scrap 500 and 1,000 rupee banknotes as part of a crackdown on tax dodgers and counterfeiters removed 86 percent of the currency in circulation virtually overnight.

That left banks flush with but knocked consumption and investment and led to markets calling for aggressive rate cuts from the RBI to support demand.

Slowing demand in the world's fastest growing major could undermine growth in coming quarters especially as factories have already started cutting output.

India's $2 trillion picked up pace between July to September compared to the previous three months, growing 7.3 percent against expectations of 7.5 percent expansion in a Reuters poll, official data showed on Wednesday.

But cooling price pressures, as reflected in the latest where both input and output price rises decelerated, may act as a temporary relief and provide room for the Reserve Bank of to cut interest rates further.

"Of respite to firms, cost inflationary pressures softened, which in turn encouraged the vast majority of businesses to keep their selling prices unchanged. If this trend is sustained we will likely see further cuts to the benchmark rate," De Lima said.

Indian consumer inflation eased for a third straight month in October to 4.2 percent, helped by smaller rises in food prices.

(Reporting by Purnita Deb; Editing by Shri Navaratnam; purnita.deb@thomsonreuters.com; +91-80-6749-6735; Reuters Messaging: purnita.deb.thomsonreuters.com@reuters.net)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Manufacturing activity cools in November on cash crunch - PMI

BENGALURU, (Reuters) - Indian factory activity decelerated sharply last month after Prime Minister Modi's currency crackdown led to a rationing of and cooled domestic consumption, new orders and production.

The Nikkei/Markit Manufacturing Purchasing Managers' Index fell to 52.3 in November from October's 54.4, its biggest month-on-month decline since March 2013.

However, it held above the 50 mark that denotes growth for the eleventh straight month.

"data for November showed that the sudden withdrawal of high-value banknotes in caused problems for manufacturers, as shortages hampered growth of new work, buying activity and production," said Pollyanna De Lima, economist at survey compiler IHS Markit.

The new orders sub index that measures both foreign and domestic demand was knocked down to 53.3 from 57.7 in October, the largest monthly fall in over 4-1/2 years.

Modi's decision last month to scrap 500 and 1,000 rupee banknotes as part of a crackdown on tax dodgers and counterfeiters removed 86 percent of the currency in circulation virtually overnight.

That left banks flush with but knocked consumption and investment and led to markets calling for aggressive rate cuts from the RBI to support demand.

Slowing demand in the world's fastest growing major could undermine growth in coming quarters especially as factories have already started cutting output.

India's $2 trillion picked up pace between July to September compared to the previous three months, growing 7.3 percent against expectations of 7.5 percent expansion in a Reuters poll, official data showed on Wednesday.

But cooling price pressures, as reflected in the latest where both input and output price rises decelerated, may act as a temporary relief and provide room for the Reserve Bank of to cut interest rates further.

"Of respite to firms, cost inflationary pressures softened, which in turn encouraged the vast majority of businesses to keep their selling prices unchanged. If this trend is sustained we will likely see further cuts to the benchmark rate," De Lima said.

Indian consumer inflation eased for a third straight month in October to 4.2 percent, helped by smaller rises in food prices.

(Reporting by Purnita Deb; Editing by Shri Navaratnam; purnita.deb@thomsonreuters.com; +91-80-6749-6735; Reuters Messaging: purnita.deb.thomsonreuters.com@reuters.net)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

image
Business Standard
177 22

Upgrade To Premium Services

Welcome User

Business Standard is happy to inform you of the launch of "Business Standard Premium Services"

As a premium subscriber you get an across device unfettered access to a range of services which include:

  • Access Exclusive content - articles, features & opinion pieces
  • Weekly Industry/Genre specific newsletters - Choose multiple industries/genres
  • Access to 17 plus years of content archives
  • Set Stock price alerts for your portfolio and watch list and get them delivered to your e-mail box
  • End of day news alerts on 5 companies (via email)
  • NEW: Get seamless access to WSJ.com at a great price. No additional sign-up required.
 

Premium Services

In Partnership with

 

Dear Guest,

 

Welcome to the premium services of Business Standard brought to you courtesy FIS.
Kindly visit the Manage my subscription page to discover the benefits of this programme.

Enjoy Reading!
Team Business Standard