Manufacturing activity in the country slowed marginally due to subdued growth in new orders, with the Purchasing Managers’ Index (PMI) falling to 51.3 in June from 52.6 in May, says a survey.
The survey by Markit, now known as Nikkei India Manufacturing PMI and earlier known as HSBC India Manufacturing PMI, is based on responses of purchasing executives in over 300 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. An index over 50 reflects an increase, while a score below 50 means a decrease.
Commenting on the new data, Pollyanna De Lima, Economist at Markit, said following the pick up in growth rates for output and new orders seen in May, the June PMI data point to a slowdown in India’s economic revival. New business expanded at a noticeably weaker pace, in part reflecting a loss of momentum in the export business. Moreover, manufacturers remained in cautious spirit and employment numbers, too, were unchanged, she added.
“Nonetheless, broad-based increases in both production and order book volumes were maintained, with consumer, intermediate and investment goods producers recording growth,” she said.
Easing inflation On the price front, there was welcome news from an easing in inflation rates, she said. Costs and charges both rose at rates that were historically muted. “With price pressures being weak and growth losing steam, June’s data suggest that the Reserve Bank’s loosening cycle is, therefore, likely to continue,” she added.
The survey said production growth has eased since May and was moderate overall. Incoming new work expanded at a modest pace that was the weakest since last September. Sector data highlighted rising output and order book volumes across the three monitored market groups. For both variables, growth was strongest in capital goods.
New export orders received by Indian manufacturers rose for the 21st month running in June. That said, the rate of expansion moderated to the slowest since December 2013.
On the job front, the survey found that the entire manufacturing sector saw employment remain broadly unchanged in June.