In what could be a potential cause for worry, the manufacturing activities have moderated in June from a 31-month high in May. The June Purchasing Managers’ Index (PMI) data pointed to an improvement in overall operating conditions for the 24th straight month.
The seasonally adjusted S&P Global India Manufacturing PMI to 57.8 in June fell from 58.7 in May. According to the survey, the overall level of business confidence rose to a six-month high. The other piece of good news is that output remained in the growth territory on the back of new work orders and favourable demand. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.
Despite the fall, the headline figure pointed to a considerable improvement in operating conditions and demand strength positively impacted several other measures such as sales, production, stock building and employment. As per the PTI report, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, “Positive client interest continued to support the manufacturing industry, driving growth of output, employment, quantities of purchases and input stocks.”
Demand strength, new client enquiries and marketing efforts underpinned optimistic forecasts towards growth prospects. On the employment front, goods producers sought to expand capacities by taking on additional workers in June. Employment rose at a moderate pace that was broadly similar to May.
The Index highlighted that the surge in input buying underscored the optimism and proactive stance of manufacturers, as they sought to capitalise on favourable market conditions. On the prices front, positive demand dynamics and greater labour costs pushed charge inflation to a 13-month high.
The S&P Global India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. Data collection began in March 2005.