India Manufacturing PMI at Eight-month High as Trends for Output Strengthens
#S&PGlobal #ManufacturingIndustry #ManufacturingProduction“The Indian manufacturing industry recorded a welcome combination of faster economic growth and softening inflation during July.” - Pollyanna De Lima, Economics Associate Director, S&P Global Market Intelligence
August 2022 : Indian manufacturers made a positive start to the second fiscal quarter, with marked gains in the growth of new business and output. While companies stepped up input purchasing, job creation remained marginal amid an uncertain outlook and a general lack of pressure on operating capacities. There was also good news on the price front, as rates of both input cost and output charge inflation subsided.
Indian manufacturing production rose at a sharp pace that was the fastest in eight months. The upturn was broad-based by sub-sector and led by investment goods. Those panellists that reported higher output volumes mentioned better demand conditions and a pick-up in sales.
Aggregate new order intakes rose substantially in July, recovering the growth momentum lost in June. The latest increase was in fact the most pronounced since last November, with quicker expansions recorded in all three broad areas of the manufacturing industry.
Although international markets contributed to the latest upturn in total order books, there was a noticeable slowdown in external sales. New export orders rose at a moderate pace that was the weakest in the current four-month period of growth.
Pollyanna De Lima, Economics Associate Director, S&P Global Market Intelligence, said, “The Indian manufacturing industry recorded a welcome combination of faster economic growth and softening inflation during July. Output expanded at the fastest pace since last November, a trend that was matched by the more forward-looking indicator of new orders.”
She further explained, “Although the upturn in demand gained strength, there were clear signs that capacity pressures remained mild as backlogs rose only marginally and job creation remained subdued.”
She added, "Purchasing activity growth ticked higher in July and firms was successful in their efforts to obtain inputs amid a second consecutive improvement in supplier performance. This in turn supported a near-record increase in inventories of raw materials and semi-finished goods as well as a softer upturn in input costs. With incidences of shortages diminishing, the rate of input cost inflation eased to an 11-month low in July, subsequently dragging down the rate of increase in output prices to the weakest in four months.”
Suppliers to the Indian manufacturing sector were able to deliver goods in a timely manner in July, with vendor performance improving marginally for the second straight month. Lead times shortened despite a substantial uptick in input buying.
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