Data on Manufacturing PMI for May was released on June 3India's manufacturing activity fell to 57.5 in May from 58.8 in April, as per the HSBC Purchasing Managers' Index (PMI), signalling a slower but still substantial improvement in the health of the sector.
“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output.
The overall rate of inflation remained below its long-run average, but picked up to its joint-highest sinceAugust 2022.
Manufacturing employment rose to one of the greatest extents seen since data collection started in March 2005.
"The deceleration in manufacturing in the past couple of months broadly correlates with corresponding GVA (albeit dated) for Q1 FY24.
Data on Manufacturing PMI for May was released on June 3
India's manufacturing activity fell to 57.5 in May from 58.8 in April, as per the HSBC Purchasing Managers' Index (PMI), signalling a slower but still substantial improvement in the health of the sector. The headline figure was nearly four points higher than its long-run average.
The country's manufacturing activity remained comfortably above the key mark of 50, which separates expansion in activity from contraction, as well as higher than the long-run average (53.9), data released on June 3 showed.
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May data showed a further upturn in Indian factory production, which stretched the current sequence of expansion to nearly three years. Despite easing to a three-month low, the rate of increase remained sharp.
Growth was supported by new business gains, demand strength and successful marketing efforts, anecdotal evidence showed. The slowdown was attributed to reduced working hours amid intensive heat and rising production costs.
Indian manufacturers expressed the highest level of positive sentiment towards growth prospects in nearly nine-and-a-half years, fuelled by advertising and innovation, alongside expectations that economic and demand conditions will remain favourable.
“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panellists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes," said Maitreyi Das, Global Economist at HSBC.
In contrast, new export orders rose at the fastest pace in over 13 years, with a broad-based demand across geography as firms noted gains from customers across several countries in Africa, Asia, the Americas, Europe and the Middle East.
However, on the price front, higher raw material and freight costs led to a rise in input prices. The overall rate of inflation remained below its long-run average, but picked up to its joint-highest since
August 2022.
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In response to the latest increase in operating expenses companies raised their own selling prices in May. The rate of charge inflation quickened to an eight-month high.
On the upside, ongoing strong sales performances combined with upbeat growth forecasts fuelled job creation in May. Manufacturing employment rose to one of the greatest extents seen since data collection started in March 2005.
"The deceleration in manufacturing in the past couple of months broadly correlates with corresponding GVA (albeit dated) for Q1 FY24. Manufacturing GVA slowed to 8.9 percent in Q1 from 11.5 percent in Q4 FY23, driven both by lower volume production as well as quarter-on-quarter easing in corporate profits, as input costs rose in Q1," said Shreya Sodhani, Regional Economist, Barclays.
