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PMI manufacturing slows to four-month low in June over GST roll-out jitters

Fear of uncertainty over the implementation of the Goods and Services Tax (GST) has cast its shadow on manufacturing activities as growth in the sector fell to a four-month low in June, showed the widely-tracked Nikkei purchasing managers’ index (PMI).
Water shortages in some parts of the country also led to the slowdown in growth.
Down from 51.6 points in May to 50.9 in June, the PMI pointed to a slight and weaker improvement in the health of the sector.
This means that manufacturing growth could be higher in Q1 of FY18 than what was witnessed in the GDP data of the fourth quarter of the previous financial year.
Output across the manufacturing economy rose for the sixth month in a row during June, which the survey participants linked to ongoing increases in client demand.
Lima, an economist at IHS Markit, said,"For the third month in a row, production growth in India eased during June.
The slowdown occurred due to weak client demand, with order books up at a slight and softer pace.
However, some companies mentioned that the implementation of the GST Bill would have a negative impact on their businesses.
While the new tax system is anticipated by some firms to generate more business, others expect the GST to have a detrimental impact on their order books," Lima said.
New orders from external markets increased at a solid rate that was the most pronounced in eight months.

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