Adding worries to the government and policy makers, the growth in India's manufacturing sector slowed sharply in April as new business inflows were broadly unchanged during the month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) falling to a four-month low stood at 50.5 in April from March’s 52.4, nearing the 50 mark that separates growth from contraction and the lowest reading of the year. A figure above 50 represents expansion while a reading below this level means contraction.
The survey highlighted that the upturn in new export orders was sustained, although growth was at a six-month low. There were divergences with regards to stock levels, with holdings of finished goods continuing to fall while pre-production inventories rose again. In contrast to the picture for total new business, new work from abroad continued to increase. The pace of growth in both domestic and foreign orders dwindled, pushing firms to reduce output. The output sub-index fell to a two-month low of 51.0 from 54.2.
According to the survey, in spite of the stagnation in new work, goods production increased in April. The rate of expansion was only slight and softened since March. Meanwhile, buying levels rose for the fourth successive month, which in turn resulted in a further accumulation in stocks of raw materials and semi-finished products. April saw manufacturing employment in India remain broadly unchanged, a trend that has been evident for almost two years. On the price front, input costs increased at the fastest rate in 11 months while charge inflation eased since March 2015.
Talking about Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at Markit has said “PMI data for India show a marked slowdown in output expansion during April, as growth of new work ground to a halt following a robust increase in the prior month.”
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