Manufacturing PMI hits 31-mth high in May on strong demand

India’s manufacturing activity in May increased to a 31-month high of 58.7 from 57.2 in April, driven by record expansion in input stocks and a strong rise in new orders and output, said a private survey on Thursday.

“India's manufacturing PMI (purchasing managers' index) showcased encouraging developments in May, painting a notably positive picture for the sector. Demand conditions demonstrated remarkable strength, with factory orders rising at the fastest pace since January 2021,” said the survey by S&P Global.

A survey print above 50 indicates manufacturing expansion and below marks contraction. In October 2020, PMI for manufacturing was recorded at 58.9. The May data pointed to a consecutive 23-month rise in factory orders, with firms associating the upturn with advertising, demand strength and favourable economic climate. The survey noted that out of the five PMI sub-components, stocks of purchases showed vigour, increasing at an unprecedented pace in May as monitored firms indicated that better supply-chain conditions and sustained increases in input purchasing boosted inventory growth.

“May data indicated a sharp and accelerated increase in quantities of purchases, with the rate of expansion quickening to the strongest in over 12 years. According to survey members, ongoing increases in new business and efforts to replenish stocks underpinned growth of buying levels. Exports gave impetus to total new orders in May. Companies registered the quickest expansion in international sales for six months,” it said.

Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said the PMI'S spotlight on soaring sales showcases robust demand for Indian-made products both domestically and internationally.

The survey noted the rising inflows of new business exerted pressure on the capacity of goods producers, supporting job creation. The rate of job growth improved to a six-month high.