Manufacturing PMI growth stagnant in April

Stands at 51.3 points; staff headcount too unchanged

Manufacturing growth has remained stagnant in the first month of the current financial year, FY15, according to the widely-tracked HSBC Purchasing Managers’ Index (PMI).

PMI stood at 51.3 points in April this year, unchanged from March. A reading above 50 denotes expansion while one below 50 implies contraction. Growth was stuck at the lowest level so far this calendar year, even as it was slightly higher than 51 points, recorded in April 2012.

Both manufacturing output and new order growth eased further in the month, even as factories across the country continued to report improving operating conditions, said Markit Economics, a financial information firm which compiles the data. However, manufacturing production rose for the sixth successive month in April, amid reports of improved new business inflows. “Nonetheless, growth of output waned on the back of competitive pressures and power outages.”

Stronger demand drove new orders received by Indian manufacturers further in April. “That said, the overall pace of expansion eased slightly since March, as increased competition for new work and the elections reportedly hampered growth,” it said. The survey indicated no change in employee headcount since March.

Sector data highlighted higher production in consumer and intermediate goods. However, a reduction was noted in the investment goods sub-sector.

In the Index of Industrial Production (IIP) data, it was consumer goods, particularly durable ones, which continued to post lacklustre production numbers till February 14. Consumer durables production contracted 9.3 per cent in the month.

According to the PMI survey, growth of new export orders eased from March’s 35-month peak to the slowest since January.

“Overseas demand improved at consumer and intermediate goods firms, whereas capital goods producers recorded the lower foreign orders in April,” it noted.

If it is reflected in official exports figures as well, the outbound shipments in April might remain dismal after contraction in two months in a row — February and March.

Output inflation was only marginal and, together with input inflation, the joint rate of price rise was the weakest in 11 months.

HSBC’s chief economist for India and Asean, Leif Eskesen, however, cautioned: “Encouragingly, inflation pressures eased, but that does not mean the RBI (Reserve Bank of India) can take down its inflation guards.”

The central bank has not been relenting to the pressure of interest rate cuts as risks to high inflation remain.
 

Month		PMI Manufacturing
Mar-13		52.0
Apr-13		51.0
May-13		50.1
Jun-13		50.3
Jul-13		50.1
Aug-13		48.5
Sep-13		49.6
Oct-13		49.6
Nov-13		51.3
Dec-13		50.7
Jan-14		51.4
Feb-14		52.5
Mar-14		51.3
Source: Markit Economics