In a shocker, India’s manufacturing activity slowed and the sector output slipped to a seven-month low in September. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index slipped to 51.2 in September, as compared to 52.3 in August, it was the second successive fall in input costs. According to the survey, PMI was weighed down by slower increases in new orders and output as growth of new work moderated to the weakest since June, reflecting challenging economic conditions. However, the survey also noted that composite single-figure indicator of manufacturing performance was consistent with a marginal improvement in business conditions across the sector and the PMI averaged 52.1 for the July-September quarter, above the prior reading of 51.8.
As per the survey the September data highlighted the first back-to-back declines in input prices since the financial crisis. Although indicative of a moderate decrease in cost burdens, the respective index posted its lowest reading since February 2009.
The survey also pointed that weaker increases in new business inflows and a cautious approach to costs reportedly led Indian manufacturers to shed jobs in September. This followed stagnation in employment levels in the prior month. The sector’s labour market was squeezed in September as companies attempted to minimize operating costs. Growth of new work moderated to the weakest since June, reflecting challenging economic conditions.
Manufacturers passed lower input costs on to clients, with selling prices falling again in September. Output charges decreased at a slight rate, however, that was broadly in line with that seen in August. The survey respondents reported softer global demand for their goods as new business from abroad expanded at the slowest pace in the current 24-month sequence of growth and one that was marginal overall.
Some divergence was seen in stock levels and while the post-production inventories decreased, holdings of raw materials and semi-manufactured goods rose. Overall the manufacturing production in September was weighed down by a difficult economic climate.