The Nikkei Purchasing Manages’ Index numbers for July
showed improvement. The Manufacturing number was 51.8, up slightly on June and
the Services number was 51.9, up from 50.3 in June. Core sector growth was 5.8%
in June, up from 2.8% the previous month. In June the Index of Industrial
Production increased by 2.1%, the best number since December 2015. Inflation
numbers confirmed the concerns at the RBI: CPI rose to 6.1% in July, up from
5.8% in June. WPI maintained its advance out of deflationary territory, rising
to 3.6% in July after 1.6% in June. The dominant contributor was food prices.
The monsoon settled back in August, such that rainfall in the season so far is
equal to the Long Period Average. Precipitation in September is expected to be
no more than normal, so the final outcome will be lower than optimistic
forecasts but normal nonetheless. The final outcome is largely irrelevant
however, as the geographic and temporal distributions have enabled bumper
cropping, ensuring an excellent kharif harvest. Prospects for the second, Rabi
crop, which is dominated by wheat, will depend on water table replenishment,
which has been good and reservoir levels which are recovering.