MOMR September 2017
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World Economy

24

OPEC Monthly Oil Market Report – September 2017

Graph 3 - 20: Indian trade balance

Graph 3 - 21: Indian gold imports

India's

industrial output

shrunk for the first time in four years in June, down by 0.1% y-o-y following an

upwardly revised 2.8% rise in the previous month. The slowdown is largely attributed to the disruption in the

manufacturing sector amid the uncertainty over the GST. The high-base effect from last year when the IIP

grew 8.0% y-o-y in June 2016 exacerbated the decline. The manufacturing sector contracted 0.4% y-o-y in

June, while mining and electricity growth were also weak. On a use-based approach, all but the output of

consumer non-durable goods and infrastructure and construction-related items declined in June, with

consumer durable goods down by 2.1% y-o-y. Weaker industrial output in June was expected and

contraction in the IIP will probably extend into July and possibly August, as producers and retailers adjust to

the new pricing and filing requirement.

The

Nikkei Manufacturing PMI

in India unexpectedly jumped to 51.2 in August from 47.9 in the previous

month, as disruptions stemming from confusion over a new national sales tax eased. The figure beat market

estimates of 49.3, supported by a rebound in output and new orders while new export orders increased for

the third consecutive month and employment expanded to the greatest extent since March 2013. Also,

buying levels rose at their fastest pace since May. At the same time, worries about the possibility of

unexpected policy decisions weighed on confidence from July’s 11-month high. The Nikkei Services PMI in

India came in at 47.5 in August from 45.9 a month earlier. It was the second straight month of contraction in

service activity as the sector was impacted by the goods and services tax (GST) introduced in July.

Graph 3 - 22: Indian PMIs

Graph 3 - 23: Indian industrial breakdown

The expectation for India’s 2017

GDP growth

was revised down to 6.9% from 7.0% in the previous month

and the expectation for 2018 growth remains unchanged at 7.5%.

22.5

-34.0

-11.4

-50

-40

-30

-20

-10

0

10

20

30

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Exports

Imports

Trade balance

US$ bn

Sources: Ministry of Commerce and Industry and

Haver Analytics.

-150

-100

-50

0

50

100

150

200

250

300

350

-2

0

2

4

6

8

Jul 15

Sep 15

Nov 15

Jan 16

Mar 16

May 16

Jul 16

Sep 16

Nov 16

Jan 17

Mar 17

May 17

Jul 17

US$ bn

Gold imports (LHS)

Change y-o-y (RHS)

Sources: Ministry of Commerce and Industry and

Haver Analytics.

Percentage

49.0

47.5

51.2

44

46

48

50

52

54

56

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Index

Composite

Services business activity

Manufacturing

Sources: Nikkei, IHS Markit and Haver Analytics.

-30

-15

0

15

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Total IP Manufacturing IP Food products IP

Sources: Central Statistical Organisation of India and

Haver Analytics.

% change y-o-y