Total new orders fell for the first time since March 2009 during June, although marginally. The HSBC Purchasing Managers' Index (PMI) recorded above the no-change threshold for the fifty-first consecutive month in June. At 50.3, up slightly from 50.1 in May, the latest index reading was consistent with a marginal expansion of the country's manufacturing sector.

Panel members commented that economic conditions in India were fragile, resulting in lower demand. There were also reports of increased competition for new work. Export business, however, rose at the sharpest rate since January as demand from key foreign clients strengthened. Orders from abroad expanded at consumer and intermediate goods producers, but in the investment goods sector a decline was registered.

Commenting on the India Manufacturing PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said,

"Manufacturing activity was broadly flat in June. Output continued to contract due to power shortages, albeit less so than last month. Moreover, new orders contracted led by weaker domestic demand. At the same time, employment firmed and stocks of finished rose. Despite the moderate pace of growth, output prices picked up slightly and input prices rose more notably, partly in response to the depreciation of Rupee."

Reduced output levels were recorded for the second month running in June, amid evidence of tougher economic conditions and persistent powercuts. That said, the overall pace of contraction was slight and eased since May. Production fell across all three monitored sub-sectors, with the fastest decline recorded at consumer goods producers.

GoodReturns.in