 "Manufacturing growth recovers in March with PMI at 8 month high of 52.4")
India’s manufacturing growth registered an uptick in March, mainly due to rise in new orders after remaining unchanged in February.
The Nikkei purchasing managers’ index (PMI) survey showed manufacturing at an eight-month high of 52.4 after the 51.1 points reading in February. This is a third consecutive monthly improvement in business conditions across the sector.
The Nikkei purchasing managers’ index (PMI) survey showed manufacturing at an eight-month high of 52.4 after the 51.1 points reading in February. This is a third consecutive monthly improvement in business conditions across the sector.
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The seasonally adjusted is a composite single figure indicator of manufacturing performance and a reading above 50 represents expansion, while one below this level means contraction. Manufacturing had contracted last in December at 49.1 points.
The March data showed that along with improved domestic demand, producers also recorded an increase in new export business. Production growth accelerated to the fastest since August 2015, amid a stronger upturn in new business inflows. The latest expansion witnessed consumer goods posting the quickest rate of increase.
New business inflows increased at a solid pace and one that was the most pronounced since last July. But there still remained room for improving growth. “Despite gathering momentum, growth of production and new orders still remained below trend rates,” said Pollyanna De Lima, economist at Markit.
However, a faster expansion in new business inflows failed to lift growth of output, and workforce numbers were left broadly unchanged again, the monthly survey noted. Anecdotal evidence indicated that firms held off hiring amid backlogs of work decreasing in March and highlighting spare capacity in the sector. This prevented manufacturers from taking on additional workers, it said.
On the price front, cost inflation accelerated, while charges were raised to the greatest extent since November 2014. “In addition to the underlying growth picture, a lot of focus remains on the trend in prices. On this front, March’s survey suggests that inflationary pressures in manufacturing are on the upside, with cost burdens rising at the quickest pace in three months and output charge inflation reaching a 16-month high,” Lima pointed out.
According to official figures, merchandise exports contracted for 15 months in a row till February. While PMI declined to 50.7 points in October from 51.2 points in the previous month, official figures showed that manufacturing was up almost 10 per cent in October. As such, the PMI numbers should be cautiously interpreted.
