According to the HSBC India Manufacturing Purchasing Managers’ Index, compiled by S&P Global, manufacturing PMI fell from 58.8 in April to 57.5 in May, signalling a slower but still substantial improvement in the health of the sector.
India’s manufacturing growth slowed to a three-month low in May to 57.5, as heatwave conditions prompted some companies to reduce working hours, data released by S&P Global on Monday showed. However, it maintained that the factory activity remained robust overall, bolstered by strong international sales. Growth, it added, was supported by new business gains, demand strength and successful marketing efforts.
Asia’s third-largest economy often sees high temperatures during May and they soared above 50 degrees Celsius (122°F) in some northern and western regions last month.
According to the HSBC India Manufacturing Purchasing Managers’ Index, compiled by S&P Global, manufacturing PMI fell from 58.8 in April to 57.5 in May, signalling a slower but still substantial improvement in the health of the sector. The headline figure was nearly four points higher than its long-run average.
Maitreyi Das, Global Economist at HSBC, said, “The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panellists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes.”
India’s manufacturing sector remained firmly in expansion midway through the first fiscal quarter, despite a mild loss of growth momentum. Companies indicated that working hours had been reduced amid an intensive heatwave, which somewhat hampered production volumes. New orders also rose at a softer pace, but international sales increased to the greatest extent in over 13 years. Firms noted gains from customers across several countries in Africa, Asia, the Americas, Europe and the Middle East.
Per the report, goods producers were at their most upbeat about the outlook in nearly a decade, and lifted workforce numbers at one of the fastest rates seen in the survey history. Meanwhile, there were stronger increases in both input costs and output charges.
“In contrast, new export orders rose at the fastest pace in over 13 years, with a broad-based demand across geography. On the price front, higher raw material and freight costs led to a rise in input prices. Manufacturers were only able to pass on a part of this increase to consumers, resulting in a squeeze in manufacturing margins. The positive news is that May recorded the highest level of positive sentiment among manufacturing firms in just under a decade, resulting in increased job creation,” Maitreyi Das added.
According to the S&P Global report, manufacturing employment rose to one of the greatest extents seen since data collection started in March 2005. Jobs growth, parallel to rising material and freight costs, underpinned a quicker increase in input costs at goods producers.
Source:financialexpress.com