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Economy on track? Nov Composite PMI sees quickest growth since note ban

Should augur well for Q3 GDP growth, tweets Economic Affairs Secretary Subhash Garg

Indivjal Dhasmana  |  New Delhi 

Composite PMI
Photo: Shutterstock

After subdued (GDP) growth in the second quarter (Q2) of the current financial year (2018-19), widely tracked purchasing managers’ index (PMI) provided a ray of hope for the economy.

The country’s grew at the highest rate since (November 8, 2016), showed the data released by the survey. This prompted the finance ministry and the Reserve Bank of India (RBI) to emphasise that the economic growth is on track.

Manufacturing and services (both private and public sectors) account for almost 74 per cent of the country’s GDP.

ALSO READ: PMI data: Rise in biz activity in Nov to support GDP growth, says Garg

At 54.5 points, India Output Index pointed to the fastest expansion in private sector activity since October 2016, which was a month before was announced by Prime Minister The index stood at 53 points in October.

The RBI in its policy statement pointed out that the Output Index touched a two-year high of 54.5 in November. That, along with other factors, has prompted it to retain its GDP growth projection at 7.4 per cent for 2018-19, despite a muted 7.1 per cent GDP growth in Q2.

ALSO READ: Services PMI climbs to a 4-month high in November on domestic demand


The rose as services PMI rose to a four-month high of 53.7 in November, from 52.2 in October due to new orders.

The PMI data released on Monday had shown that the index for manufacturing was up at 54 points in November, the highest so far in this calendar year.

The survey noted that exports rose to a four-year high in November, even as there was decline in new orders for services from overseas.

Economic Affairs Secretary Subhash Garg said the augurs well for third quarter (Q3) GDP growth.

ALSO READ: Manufacturing PMI jumps to 11-month high of 54 in November on strong demand

“Fastest expansion in in November since October 2016... PMI notes quickest pace of growth in exports in November in the last four years. Overall strong increase in business activity and in demand. Should augur well for 3rd quarter GDP growth,” Garg tweeted.

Pollyanna De Lima, principal economist at IHS Markit, and author of the report, also said that the data shows the private sector will provide impetus to GDP numbers in Q3.

“The welcoming .. so far suggests that the private sector economy will provide impetus to Q3 2018-19 GDP results,” the economist said.

On employment, the survey said additions to the workforce were maintained for the 16th month running. “So far, 2018 proved to be the strongest year for employment growth for a decade,” Lima added.

ALSO READ: New business orders, employment push manufacturing PMI to 53.1 in October

The data showed that the picture for prices was mixed, as input cost inflation moderated to a seven-month low, but firmer demand enabled firms to hike their charges to a greater extent.

First Published: Wed, December 05 2018. 20:19 IST