India’s manufacturing conditions improved in June at the strongest pace since December 2017

New Delhi, July 2 (KNN) India’s manufacturing conditions improved in June at the strongest pace since December 2017, supported by the sharpest gains in output and new orders in 2018 so far, said Nikkei India Manufacturing Purchasing Managers' Index Report.

The Manufacturing PMI rose to 53.1 in June from 51.2 in May. A reading above 50 indicates an expansion in manufacturing activity while one below 50 points to contraction.

“India’s manufacturing economy closed the quarter on a solid footing against a backdrop of robust demand conditions, highlighted by the sharpest gains in output and new orders since last December”, said Aashna Dodhia, Economist at IHS Markit and author of the report.

Orders from international markets rose at the strongest pace since February.

As per the survey, the rate of growth of manufacturing production was the most pronounced since last December. Moreover, stronger demand conditions made firms raise their staffing levels.

However, Dodhia pointed to a note of caution looking ahead, as business sentiment eased to the weakest since last October during June based on concerns of a potential market slowdown in the year ahead.

“Indeed, some of the key challenges to the 12-month outlook include tighter domestic monetary policy and persistently high inflation,” she said.

The Report further pointed that the input costs faced by Indian manufacturing companies rose in June, thereby stretching the period of inflation to 33 months. Moreover, the latest rise was the sharpest since July 2014.

Panellists reported that steel and fuel were among the key items that increased in price.

Subsequently, firms raised their output charges at the fastest pace since February.

Despite strengthening demand conditions, business sentiment was at the weakest level seen since last October. Optimistic projections for output reflected expectations that demand conditions will improve over the next 12 months, according to anecdotal evidence.