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Factory production lost momentum in June as the Manufacturing Purchasing Managers’ Index (PMI) slowed to 52.1 in June as against 52.7 of May. A softer increase in new work intakes translated into slower rise in output and employment, while the upturn in quantities of purchases strengthened. June data continued to show only a moderate increase in input costs, which, in turn, supported another round of selling charges discounting. Consumer goods was the key source of growth, where robust increases in sales, output and employment were registered. Modest expansions in production and new work were noted in the intermediate goods category, but here jobs stagnated. At the same time, operating conditions in the capital goods sector were broadly unchanged, the report said.
June 2019:52.1
May, 2019: 52.7
Manufacturing PMI
A reading above 50 indicates expansion, while a score below this mark indicates a contraction.
HIGHLIGHTS
- The upturn in total sales was the second slowest in nine months, ahead of that noted in April
- Growth of new export orders showed signs of weakness, easing to the second-slowest in over a year.
- Consumer goods exports rose markedly, while marginal increases were noted in the intermediate and capital goods segments
- Firms willingness to spend continued in June, with additional staff being hired and further raw materials purchased
- Suppliers comfortably accommodated for the uptick in input buying growth, as signalled by an overall reduction in delivery times.
- Manufacturers remained upbeat about growth prospects in June, with marketing initiatives, stable political conditions and forecasts of a pick-up in demand underpinning positive sentiment
(QUOTE)
PMI data highlighted a slight setback in the Indian manufacturing sector during June. Gauges of factory orders, production, employment and exports remained inside growth territory, but rates of expansion softened in all cases as domestic and international demand showed some signs of fading. Upbeat growth projections continued to underpin job creation and the stockpiling of inputs, but cracks appeared in the form of a softer rise in employment and waning optimism. Also, a further decline in unfinished business points to excess capacity among goods producers, meaning that job creation may come to a halt in the near term should demand growth fail to revive. Tamed cost inflation may assist competitive pricing and lift demand to a meaningful extent as we head into the second half of 2019.
- Pollyanna De Lima, Principal Economist at IHS Markit
Source: IHS Markit
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