Nikkei India Manufacturing PMI® : IHS
Further slowdown in manufacturing sector growth in India
▪ Weakest improvement in business conditions since August 2018
▪ Softer increase in production mirrors slower rise in sales
▪ Exports remain a source of strength
Data collected April 10-24 :
A softer increase in new orders created a domino effect in the Indian manufacturing industry, restricting growth of output, employment, input buying and business sentiment. The one bright spot in April was exports, which expanded solidly and at a slightly quicker pace than in March. The overall slowdown in the sector was accompanied by cooling rates of inflation.
Broken down by sector, capital goods was the key source of weakness, recording contractions in new business and output. Growth was meanwhile sustained at both consumer and intermediate goods makers.
The Nikkei India Manufacturing Purchasing Managers’ Index® (PMI® ) declined from 52.6 in March to 51.8 in April. This indicated a slight improvement in the health of the sector that was the slowest in eight months and weaker than the average for the 14-year survey history.
New business growth moderated at the start of fiscal year 2019, reportedly curbed by the elections and a challenging economic environment. The increase in order book volumes was the weakest in eight months. International trade contributed to the rise in total sales, with new export orders expanding at a solid rate that was marginally quicker than in March.
The slowdown in growth of total sales, coupled with cashflow difficulties and competitive pressures, hampered output expansion in April. Although production rose, the increase was the slowest since last September.
As a result, holdings of finished items continued to decline. Furthermore, the pace of depletion was the quickest in seven months.
Amid reports of sufficient workforce numbers to cope with existing workloads, the vast majority of companies withheld hiring in April. Aggregate manufacturing employment rose, but only fractionally and to the weakest extent in the current 13-month sequence of job creation.
Similarly, quantities of purchases expanded marginally and at the slowest pace since the latest stretch of growth started in mid-2018. Anecdotal evidence suggested that low funds at some firms prevented them from buying additional materials in April. In turn, stocks of purchases rose at the joint weakest pace since last August.
Price pressures subsided in April. Input cost inflation eased to a 43-month low and factories responded by lifting their own fees to a lesser extent. The rate of charge inflation was marginal and below its long-run average.
Meanwhile, there were signs of a lack of pressure on the capacity of both manufacturers and their suppliers. The latter was evidenced by broadly unchanged delivery times. Concurrently, a marginal uptick in outstanding business was noted at factories, one that was the slowest in six months.
Output expectations remained positive in April, with optimism supported by post-election growth predictions. A number of firms plan to expand capacity and invest in advertising in order to boost sales and production in the year ahead.