Business activity in Indian manufacturing sector eased in the month of July 2018 as new orders and output rose at slower pace. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance -fell to 52.3 in July from 53.1 in June 2018. Nevertheless, despite a slight deceleration, the manufacturing sector activity expanded for the twelfth consecutive month as the PMI reading stood above the watershed 50 mark, which differentiates growth from contraction.
The report further noted that strong demand and favourable market conditions led to the growth of new business and output in the reported month, despite easing from June’s six-month high. Reflecting the trend for new business, new export orders rose for the ninth month in succession during July, on the back of strong demand from international markets for Indian goods. However, job creation slowed down marginally, even though firms were encouraged to raise their staffing levels for the fourth successive month in July.
On the inflation front, inflationary pressures in the Indian manufacturing economy rose in July, thereby stretching the period of inflation to 34 months amid rising steel and crude oil prices. However, the rate of increase eased from June’s near four-year high and was in line with the series trend. Subsequently, firms raised their output charges at a modest and slower pace