India’s Manufacturing Sector Slows To An Eight-month Low: PMI Report

India’s manufacturing sector performance slowed down to an eight-month low in April as new business growth moderated, curbed by the elections and a challenging economic environment, a monthly survey suggested.

The Nikkei India Manufacturing Purchasing Managers’ Index — an indicator of economic health for manufacturing and service sectors — reportedly declined from 52.6 in March to 51.8 in April, reflecting weakest improvement in business conditions since August 2018.

According to a PTI report, this is the 21st consecutive month that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

The April PMI data indicated that softer increase in new orders, restricted growth of output, employment and business sentiment.

“Although remaining inside expansion territory, growth continued to soften and the fact that employment increased at the weakest pace for over a year suggests that producers are hardly gearing up for a rebound,” Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, told PTI.

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De Lima further added that when looking at reasons provided by surveyed companies for the slowdown, disruptions arising from the elections was a key theme, “firms also seem to have adopted a wait-and-see approach on their plans until public policies become clearer upon the formation of a government”.

The Lok Sabha polls that began on April 11 is currently underway. Votes will be counted on May 23.

Per the report, input cost inflation eased to a 43-month low while the rate of charge inflation was marginal and below its long-run average. “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,” said De Lima.

The next meeting of RBI’s Monetary Policy Committee is scheduled on June 3-6.

(With PTI inputs)