Slow business inflows affect India’s manufacturing PMI in June
The health of Indian manufacturing economy improved in June, but output growth eased on the back of a weaker rise in new business inflows, said an economic survey report released on Wednesday. Workforce numbers remained unchanged during the month, thus, reflecting companies’ efforts to keep expenses stable. However, inflation rates softened with both input costs and output charges rising at below-trend rates, noted the Markit Economics report. Notably, the survey said, “India’s Manufacturing Purchasing Managers’ Index (PMI) fell from 52.6 in May to 51.3 in June, continuing ‘above the 50.0 no-change index mark’ for the twentieth successive month.” Incoming works expanded at a modest pace in June 2015 recording a weakest pace since September 2014 and work backlogs also rose in the month due to delay in payments from the client-side. Even though new export orders received by Indian manufacturers rose for the twenty-first month in June, the rate of expansion in June remained the slowest since December 2013. The accumulation rate of finished goods also remained modest continuing a weak trend since May. June data also highlighted twentieth consecutive monthly expansion of buying levels, with survey panelists indicating that ‘higher quantities of inputs purchased reflected rising production needs’. However, the purchasing activity grew moderately and remained slower in June compared to May, noted the report. “Following a pickup in the growth rates for output and new orders seen in May, June PMI data pointed to a slowdown in India’s economic upturn,” said Pollyanna De Lima, Economist at Markit and author of the report. The Markit Economist further said that new business expanded at a noticeably weaker pace, in part reflecting a loss of momentum in export business and added that manufacturers remained in cautious spirits, employment numbers were unchanged once again. Costs and charges both rose at rates that were historically muted and with price pressures being weak and growth losing steam, June’s dataset suggests that the RBI’s loosening cycle is, therefore, likely to continue, she noted. PMI is a composite gauge that gives an overview of country’s manufacturing business conditions through an index figure. While above 50 index figure indicates expansion, level below that indicates contraction.
July 1, 2015 | 5:36 pm IST.