Even as output expanded, the Manufacturing Purchasing Managers’ Index (PMI) eased to 57.8 in June, as against 58.7 in May, mainly on account of base effect, a survey report prepared by S&P Global Market Intelligence, released on Monday, showed.

One important factor here is that new job creation did rise in the said month. albeit at a moderate pace, just like in May. Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said June’s PMI results again showed robust demand for Indian-made products, both in the domestic and international markets. Positive client interest continued to support the manufacturing industry, driving growth of output, employment, quantities of purchases and input stocks. “These positive developments instilled greater confidence in manufacturers regarding growth prospects, boding well for the business investment and the labour market,” she said.

This survey is the first indication of industrial performance in a month. The Government figure for performance in June will be made public on August 14. The result of the survey, along with data of the e-way bill, will also give an indication about GST collection.

The survey report noted surging demand for Indian goods translated into higher sales for manufacturers, which under-pinned another robust expansion in input purchasing, as firms actively procured resources to support production growth. Although the latest PMI results indicate contained input cost inflation, there was a marked increase in output charges. “Positive demand dynamics and greater labour costs pushed charge inflation to a 13-month high,” the report said.

According to De Lima, the surge in input buying underscored the optimism and proactive stance of manufacturers, as they sought to capitalise on favourable market conditions and obtain resources to support production growth. Supported by buoyant client appetite, manufacturers lifted their selling prices in June. In certain cases, the upturn was attributed to higher labour and input costs.

Although average purchasing prices continued to increase in June, the rate of inflation was mild by historic standards and among the lowest seen over the past three years. To meet rising sales, companies ramped up production in June. The expansion in output was sharp and among the fastest over the past year-and-a-half.

“Presented with buoyant demand, manufacturers seized the opportunity to adjust their pricing strategies. The latest increase in output charges reflected firms’ ability to pass on a higher cost burden to customers, while maintaining a competitive edge,” De Lima said.

The PMI is based on a survey conducted among purchasing managers in a panel of around 400 manufacturers. Survey responses are collected in the second half of each month and indicates the direction of change compared to the previous month. The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses.

The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and a reading below 50 pointing to an overall decrease. The indices are then seasonally adjusted. The PMI is a weighted average of the following five indices: New Orders (30 per cent), Output (25 per cent), Employment (20 per cent), Suppliers’ Delivery Times (15 per cent) and Stocks of Purchases (10 per cent).

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