The Nikkei India Manufacturing Purchasing Managers Index, an indicator of the economic health of the country’s manufacturing sector, rose to 53.1 in June. This is 11 successive months of expansion and June PMI recorded strongest pace since December 2017, supported by the sharpest gains in output and new orders in 2018 so far. Reflecting greater production requirements, firms were encouraged to engage in purchasing activity and raise their staffing levels.

June PMI May PMI

53.1 51.2

Manufacturing PMI

The PMI has now registered above 50 for two successive months. A reading above 50 indicates expansion, while a score below this mark indicates a contraction.

HIGHLIGHTS

- Output and new orders rise at the fastest rates in 2018 so far

- Input cost inflation at the sharpest since July 2014

- New export orders rose across India’s goods-producing economy for the eighth successive month in June

- Outstanding business rose for the third month in succession at the end of the second quarter

- Post-production inventories held by Indian manufacturing companies continued to reduce

- Reflecting a sustained period of growth in output and new orders, firms raised their payroll numbers for the third month in succession

(QUOTE)

“The RBI recently raised interest rates for the first time in four years to contain inflation and stabilise the rupee. However, input cost inflation quickened to the strongest since July 2014 in June, suggesting that the central bank could remain under pressure to tighten monetary policy.

- Aashna Dodhia, Economist at IHS Marki

The Nikkei India Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies. The manufacturing sector is divided into eight broad categories: Basic Metals, Chemicals & Plastics, Electrical & Optical, Food & Drink, Mechanical Engineering, Textiles & Clothing, Timber & Paper and Transport. The Manufacturing PMI is based on five individual indexes with the following weights: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stock of Items Purchased (10 percent)

Source: Nikkei, IHS Markit