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Nikkei India PMI slips to 3-month low of 51.6 in May

01 Jun 2017 Evaluate

India’s manufacturing sector growth slipped to a three-month low in May due to softer expansions in new orders and production. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- was down to 51.6 in May from 52.5 in April. However, the reading signalled an expansion for the fifth consecutive month, remaining above the no-change mark of 50.0.

As per the survey, while a further upturn in new business supported output growth, incoming new work rose at the weakest pace since February with slowdowns evident in the consumer and intermediate goods categories.  The spending patterns remained varied with employment down but quantities of purchases up from April.

The survey said that holdings of finished goods decreased in May as companies sought to fulfill orders from stocks. Besides, international demand for Indian-manufactured goods deteriorated in the reported month, as signalled by a decline in new export orders. The contraction was only slight, but ended a three-month sequence of growth.

On inflation front, the survey said that the rate of inflation softened to the slowest in eight months. However, factory gate charges increased at a slightly quicker pace than in April. Besides, cost burdens facing Indian goods producers continued to rise in May with chemicals, metals, paper and plastics all reported to be up in price. While, degree of optimism climbed to a six-month high, business confidence improved in May, with firms expecting new product launches, machinery acquisitions and marketing campaigns to support output growth in the year ahead.

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