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Manufacturing PMI weakens in June on slow business orders |
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NEW DELHI: India's manufacturing activity slowed in June as new business orders eased after a robust performance in the previous month, a private survey showed on Wednesday. Inflationary pressures remained muted and are expected to give greater flexibility to the central bank during global economic pressures.
The Nikkei India Manufacturing Purchasing Managers Index, compiled by Markit, eased to 51.3 points in June from 52.6 in the previous month, marking the 20th straight month of expansion.
A reading of over 50 signals growth, while a lower figure indicates contraction. "...June PMI data pointed to a slowdown in India's economic upturn. New business expanded at a noticeably weaker pace, in part reflecting a loss of momentum in export business. Moreover, manufacturers remained in cautious spirits and employment numbers were unchanged once again," said Pollyanna De Lima, economist at Markit and author of the report.
India's economy expanded 7.3% in 2014-15, up from 6.9% in 2013-14. Manufacturing growth rose sharply to 8.4% in the last quarter of the previous financial year as against 3.6% in the third quarter. The government has forecast GDP growth of between 8.1% and 8.5% for the current financial year.
The production sector, stressed for over the past two years, has started showing signs of recovery on easing of supply-side bottlenecks. An index of eight core industries rose 4.4% in May from a year earlier, official data showed on Tuesday. Employment levels remained stagnant, reflecting the cautious stance of manufacturers to hiring, according to the Markit report.
Growth was strongest for capital goods producers, according to the report, based on the survey of 500 private sector companies.
Incoming new work expanded at the weakest pace since last September, said the report. New export orders received by manufacturers rose for the 21st month running in June, although at the slowest pace since December 2013. India's outbound shipments declined for the sixth month in a row in May, according to official data. On prices, the report highlighted easing inflationary pressures.
Both input costs and output charges rose at rates that were below their respective long-run averages, the report said.
"With price pressures being weak and growth losing steam, June's dataset suggests that the RBI's loosening cycle is, therefore, likely to continue," De Lima said. Retail inflation, the primary gauge of the Reserve Bank of India, inched up to 5.01% in May versus 4.87%. The RBI cut interest rates thrice since January by 25 basis points each, taking the repo rate to 7.25%. Banks have started passing on the benefit to consumers by cutting lending rates.
Source : economictimes.indiatimes.com
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