PMI survey: Manufacturing sector grows for fourth consecutive month

INDIA’S MANUFACTURING activity expanded for a fourth consecutive month in April, aided by stronger growth in new orders while the rise in output and employment slowed, a monthly survey said.

The Nikkei/markit Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, held steady at March’s 52.5 last month, its fourth month above the 50 mark that separates growth from contraction. A reading above 50 indicates expansion, while a score below this mark means contraction.

Input costs rose for the 19th straight month for manufacturers, amid indications that persisting inflationary pressure may force the Reserve Bank to continue with its ‘neutral’ monetary policy stance, to which the central bank recently shifted from an earlier ‘accommodative’ mode.

“Consumers were the key drivers of growth,” said Pollyanna De Lima, economist at IHS Markit. “Buoyant domestic demand coupled with sustained growth of new orders from abroad boosted the upturn in total new business received by Indian manufacturers in April.”

A new orders sub-index rose to a six-month high of 53.8 last month from March’s 53.6. Foreign demand also rose, although at a slower pace.

The increase in demand only provided a more modest lift to overall output and employment as higher prices of raw materials ate into firms’ profits.

“Scratching beneath the surface we can see that consumers were the key drivers of growth as consumer goods producers registered by far the steepest expansions in both production and new orders,” Lima said.

Lima further noted that Indian manufacturer believe output is expected to remain on an upward trajectory amid reports of planned capacity expansions, new product launches, aggressive marketing campaigns and an improving economic scenario.

But despite rising cost burdens, factory gate prices barely rose as owners tried to sustain demand still recovering from Prime Minister Narendra Modi’s shock move late last year to ban high-value currency notes that caused a huge disruption. Decent economic growth and low inflation support the Reserve Bank of India’s recent shift to neutral from an accommodative policy stance.

The Nikkei/markit Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, held steady at March’s 52.5 last month