Signaling weaker improvement in the health of the sector, manufacturing activity in India fell to a four-month low in June amid softer rise in factory new orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance-slipped to 50.9 in the month of June as against 51.6 in the month of May. However, the reading remained above the 50 level that separates growth from contraction for a sixth straight month on the back of ongoing increases in client demand.
According to the survey data, the challenging economic conditions, water shortages and the upcoming implementation of the goods & services tax (GST) hampered on the growth of the sector. Further, it said that growth of total order books eased to a four-month low, with the intermediate goods category the key source of weakness. Besides, payroll numbers and purchasing activity witnessed marginal increment in the month of June. The survey also pointed that ongoing growth of buying levels, though the rate of expansion has softened from May.
In the month of June, input costs continued to increase, however, the rate of inflation was modest and the weakest since August 2016. Similarly, output charges rose only slightly, at a below-trend pace. Besides, confidence towards future performance was mixed among the survey participants. While the new tax system is anticipated by some firms to generate more business, others expect the GST will have a negative impact on their businesses.
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