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India's PMI Falls

(Image source: Anindito Mukherjee/Reuters)

Problems continue to persist in India. The countries service activity contracted for the month of August. According to the HSBC-Markit Purchasing Managers Index, the manufacturing and service sectors in India slipped to 47.6 in August, which was a four year low. Compared to July that is a 0.8 drop. The drop in PMI was led by the depreciating rupee. The deceleration of the rupee is causing higher input costs for the private sector and increasing import prices for raw materials. For example, According to HSBC Chief Economist for India and ASEAN Leif Eskesen, "Manufacturing activity contracted in August for the first time since March 2009. This was led by a decline in new orders, especially export orders.” 

Any PMI figure below 50 shows weakness and lack of growth, which suggests a looming slowdown in GDP for the third quarter.