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With factory growth showing an upward sign, India’s manufacturing Purchasing Managers’ Index (PMI) rose to 51.6 in April from 51 in March. This reflects the ninth consecutive month of improvement in manufacturing conditions.
Based on a survey among purchasing managers in over 400 manufacturing companies, a report related with the index said the rate of expansion was solid and had picked up from March’s five-month low, but remained slightly weaker than the current series trend.
“Roughly 22 per cent of panellists reported growth, which they widely linked to favourable demand conditions. Greater output was evident in the consumption and intermediate market groups,” it said. This index is prepared by IHS Markit and released as Nikkei India Manufacturing PMI. An index above 50 shows expansion, while below 50 indicates contraction.
Managers participating in the survey opined that inflationary pressures continued to ease in April, with the softest increases for input costs and output charges reported since September 2017 and July 2017, respectively. They also said favourable demand conditions supported the latest upturn.
Greater production in consumption and intermediate groups outweighed the decline in investment goods. New business rose for the sixth consecutive month. Although modest, the rate of expansion has accelerated since March. Panelists reported that stronger market demand led to greater client wins.
Reflecting sustained growth in production and new orders, manufacturers were prompted to raise their purchasing activity for the sixth consecutive month in April. Despite being modest, the rate of increase accelerated to the strongest since January.
Meanwhile, divergences were recorded for both pre- and post-production stocks. The former rose at the fastest pace in 2018 so far, while inventories of finished goods were depleted at the joint-fastest rate in survey history. Indian manufacturers faced higher input costs during April.
The survey found business sentiment at the strongest level seen since the implementation of the Goods and Services Tax in July 2017. Optimism reflected expectations that new business and demand conditions will improve over the coming 12 months, according to the panelists.
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