)
Manufacturing activity in the country rose in March over the previous month on the back of output growth and increase in new orders, but was lower than January, showed the widely tracked HSBC purchasing managers’ index (PMI). Ahead of the Reserve Bank of India (RBI) monetary policy review next week, the PMI survey showed that inflation has risen both on the input and output sides.
Firms have not been hiring additional workers for 14 months now and this time, rising costs have deterred them from doing so. The PMI reading rose to 52.1 points in March from 51.2 in February. A reading above 50 shows expansion and one below that implies contraction. The PMI stood at 52.9 points in January.
Firms have not been hiring additional workers for 14 months now and this time, rising costs have deterred them from doing so. The PMI reading rose to 52.1 points in March from 51.2 in February. A reading above 50 shows expansion and one below that implies contraction. The PMI stood at 52.9 points in January.
To put things in perspective, Markit Economics, the compiler of PMI data, says the average reading for the first three months of 2015 was lower than in the final three months of 2014. The former stood at 52.06 points and the latter at 53.13.
Manufacturing output increased for the 17th consecutive month in March and faster than in February, Markit Economics said further.
Pollyanna De Lima, an economist at Markit Economics, said, “Momentum is building in manufacturing. Stronger expansion of output, new orders and stocks of purchases all contributed to a higher PMI reading in March.”
Even then, staffing levels have barely changed over the past 14 months. The relief is that hiring did not decline in March, unlike in February.
De Lima said that was a signal that hesitation still prevailed among firms to hire additional workers. However, the labour market was likely to recover in the coming months, De Lima said. Underpinning the expansion in output was a quicker rise in new order flows. According to the survey participants, demand conditions improved.
Continuing the trend that started in October 2013, new export orders increased in March. Although solid, the overall growth rate moderated to the weakest in 10 months.
PMI data do not match with official figures since India's merchandise exports fell for both January and February 2015 and that too by double digits. Also, core sector data fell to a 17-month low of 1.4 per cent in March.
The official and PMI methodologies differ in the sense that PMI is a month-on-month calucation and official figures are year-on-year. Besides, official numbers are actual numbers and PMI is based on a survey of over 500 companies.
However, Markit Economics said there was evidence of ongoing pressure on the capacity of manufacturers' operations, as unfinished business increased for the 32nd consecutive month. This indicates that demand is very much there in the economy, but there are capacity constraints.
March saw a return of inflationary pressures across India’s manufacturing economy. After falling in the prior month, purchase costs rose at a marked rate that was the most pronounced since August 2014.
According to panelists, chemicals, metals, plastics, energy and paper had all risen in price. Output charge inflation quickened to the strongest in four months, as firms attempted to sustain profit margins by raising their tariffs.
MANUFACTURING LOOKS UP
MANUFACTURING LOOKS UP
