MUMBIA – At a time when demonetisation has hurt the manufacturing sector in India, China has reported the fastest growth in the sector, in four years.
Hit hard by the demonetisation move, manufacturing sector contracted in December as new work orders and output took a knock for the first time in 2016, a monthly survey by Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) — an indicator of manufacturing activity — showed.
In yet another survey, China’s manufacturing activity expanded at its quickest pace in nearly four years in December, an independent research firm said today, in a sign of improving health for the world’s second-largest economy.
The private Caixin Purchasing Managers’ Index (PMI), an indicator of conditions at smaller manufacturers, beat expectations with a reading of 51.9 in December, up from 50.9 the previous month. A PMI figure above 50 marks an expansion of activity, and below 50 a contraction.
It was the survey’s highest score since January 2013, the Chinese financial magazine said in a joint statement with data compiler IHS Markit.
“The Chinese manufacturing economy continued to improve in December, with the majority of sub-indices looking optimistic,” Caixin analyst Zhong Zhengsheng said in the statement.
In India, on the contrary, according to the Nikkei Markit India Manufacturing Purchasing Managers’ Index fell to 49.6, down from 52.3 in November. The index came in below the crucial 50 threshold — which separates contraction from expansion — for the first time in 2016 in December. “Having held its ground in November following the unexpected withdrawal of Rs 500 and 1,000 bank notes from circulation, India’s manufacturing industry slid into contraction at the end of 2016,” said Pollyanna De Lima, Economist at IHS Markit and author of the report. Lima added that “cash flow issues among firms also led to reductions in purchasing activity and employment”.
