PMI Shows Marginal Growth in Indian Mfg Sector in April

By Olga Robert
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    A monthly survey report- Nikkei India Manufacturing PMI (Purchasing Managers Index) shows that the manufacturing conditions in India have improved for the ninth consecutive month in April with the help of faster output expansion and new orders.

    The PMI is an indicator of the economic health of the manufacturing sector. It is based on five major indicators:

    1. new orders
    2. inventory levels
    3. production
    4. supplier deliveries
    5. employment environment
      PMI Shows Marginal Growth in Indian Mfg Sector in April

    The Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose from 51.0 to 51.6 in April which indicates faster improvement in the health of India's manufacturing economy than March. It was, however, a modest upturn as it was weaker than the series trend.

    Increased production requirements stimulated job creation and encouraged companies to engage in input buying. The growth in employment creation was however marginal. Inflationary pressures continued to be at ease in April, with a slight increase in input costs and output charges reported since September 2017 and July 2017 respectively.

    A major contributor to the upward movement in the headline PMI index was a strong rise in output. Output growth was solid and picked-up from March's five-month low but remained slightly below the average for the current nine-month period of expansion.

    Greater production in consumption and intermediate groups outweighed the decline in investment goods.

    New business rose for the sixth consecutive month. The rate of expansion has shown a modest acceleration since March. Nikkei panelists reported that stronger market demand led to greater client wins.

    Output growth was registered in consumption and intermediate goods. New orders from abroad rose for the sixth successive month in April. The rate of expansion, however, moderated to the weakest since November 2017. Following a marginal decline in March, outstanding work rose during April.

    Delayed payments from clients partly led to the latest increase in backlogs, according to anecdotal evidence.

    Purchasing activity of Indian manufacturers was up for the sixth consecutive month in April. The rate of increase being the strongest since January. Pre-production stocks rose at the fastest pace in 2018 so far, while inventories of finished goods were depleted at the joint-fastest rate in the survey history.

    Input costs were high for Indian manufacturers during April and extended the current period of inflation to just over two-and-a-half years but the input cost inflation moderated for the second month in a row to the weakest since last September.

    Firms raised their selling prices at the weakest rate in the current nine-month sequence of inflation.

    Finally, business sentiment was at the strongest level seen since the implementation of the GST in July 2017, said the Nikkei manufacturing PMI report. Its panelists reflected an optimism that new business and demand conditions will improve over the coming 12 months.

    Read more about: pmi manufacturing sector
    Story first published: Wednesday, May 2, 2018, 12:10 [IST]
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