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Factory Activity Slows To Eight-Months Low; Nikkei's Manufacturing PMI At 51.8

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The factory activity of India for the month of April witnessed the slowest growth in eight months after new orders as well as output declined amid cautious outlook during ongoing Lok Sabha elections.

 

IHS Markit's compiled Nikkei manufacturing Purchasing Managers' Index or PMI came in lower at 51.8 versus 52.6 reported for the March month. However, the index has managed to retain a level above 50 that separates contraction from expansion for almost 2 years time.

April Factory Activity Slows To Eight-Months Low

The optimism among manufacturing concerns receded during the month as they remained concerned in respect of what policies the new government will take to when it comes to power by May end.

"When looking at reasons provided by surveyed companies for the (April) slowdown, disruptions arising from the elections was a key theme," noted Pollyanna De Lima, principal economist at IHS Markit,"Also, firms seem to have adopted a wait-and-see approach on their plans until public policies become clearer upon the formation of a government."

A sub-index that measures new orders also declined from 54.2 in March to 52.9 in April due to slow growth in domestic demand. And it consequently impacted hiring, which hardly registered any growth.

 

"With price pressures in the manufacturing economy cooling and growth losing momentum, it's increasingly likely that the RBI may cut its official rate for a third successive time in June," De Lima said.

Currently, polling for the 17th Lok Sabha election is underway and the voting will end on May 19 with counting down on May 23.

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