April factory activity improves and output prices soar amid Covid blues

Our Bureau. New Delhi | Updated on May 03, 2021

Manufacturing PMI in April edges up to 55.5 from 55.4

Manufacturing sector showed improved activity in April 2021 as both new orders and output at Indian manufacturers expanded at marked rates, although the slowest in eight months. The Manufacturing Purchasing Managers Index (PMI) came in at 55.5 in April 2021, slightly above the March reading of 55.4, a private survey by IHS Markit showed.

India’s manufacturing PMI has remained above 50 level —which separates growth from contraction—for ninth straight month.

For the latest month under review, consumer goods was the strongest performing category, followed by capital goods and then intermediate goods, the survey showed. Both new orders and output at Indian manufacturers expanded and growth was attributed to a pick-up in demand and marketing efforts, though hampered by the COVID-19 pandemic.

While output and sales increased at the slowest rate since last August due to an intensification of the Covid crisis, there was a faster upturn in international orders. Moreover quantities of purchases expanded at one of the strongest rates seen for over nine years as firms sought to boost their inventory.

Survey participants also signalled a steep increase in input costs, the quickest since July 2014, and upward revisions to selling prices. The rate of charge inflation climbed to the highest in seven-and-a- half years. New export orders increased for the eighth consecutive month in April and the fastest rate in since October 2020, the survey showed. The rise rise was associated with the pick-up in international demand for Indian goods, with all three monitored subsectors registering expansion.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said in a statement: “The PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to 8 month lows amid the intensification of the COVID-19 crisis. Still, the increase is very strong by historical standards and the survey revealed other positive news. New export orders surged to the fastest since last October and buying levels expanded at one of the sharpest rates seen for nine years. Also, the downturn in employment eased and business confidence towards the one year outlook strengthened.

“The headwinds facing manufacturers cannot be ignored, however. The surge in COVID-19 cases could dampen demand further when firms financials are already susceptible to the hurdle of rising global prices. April saw the steepest increase in input cost for nearly 7 years drive the sharpest upturn in output prices since October 2013. Data for the coming months will be important at verifying whether client demand is resilient to these challenges or if producers will have to further absorb cost burden themselves to secure new work”

Published on May 03, 2021

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