India's manufacturing output slips to 22-month low in October
Updated: Nov 02, 2015 12:14:57pm
New Delhi, Nov 2 (KNN) India’s manufacturing sector growth slipped to a 22 month low in October indicating weaker improvement in business conditions across the sector, according to a survey.
Posting a 22-month low of 50.7 in October (September: 51.2), the seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ IndexTM (PMI)TM – a composite single-figure indicator of manufacturing performance – was indicative of a weaker improvement in business conditions across the sector, said a press release.
Nonetheless, the PMI has recorded above the crucial 50.0 threshold in each month since November 2013.
A figure above 50 represents expansion while one below that means contraction.
Output growth eased in October on the back of a slower increase in new orders. Rates of expansion in both production and order books were the weakest in their current 24-month sequences of growth, with panellists reporting challenging economic conditions and a reluctance among clients to commit to new projects.
Sector data indicated that consumer goods was the best performing category in October, while improving operating conditions were also seen in the intermediate goods sub-sector. Conversely, capital goods firms saw business conditions deteriorate in the latest month as output and new orders declined for the first time since September 2014 and August 2014 respectively.
New business from abroad placed with Indian manufacturers rose for the twenty-fifth straight month in October. However, growth was little changed from the marginal pace seen in September.
Despite the slowdown in new order growth, manufacturers hired additional workers in October. Employment rose for the first time since January, although only marginally.
October saw inflationary pressures return to India’s manufacturing economy. Average purchase costs rose, amid reports of higher metal, paper and food prices.
Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at Markit and author of the report, said: “PMI data for October show a further loss of growth momentum across the Indian manufacturing economy, with a slower rise in new business inflows resulting in a weaker expansion of output. “Undeterred by tough economic conditions overall, firms took on extra staff in October.
This, combined with a further drop in inventories of finished goods, suggests that production growth may rebound in coming months.
“Looking deeper into the data, consumer goods was – once again – the bright spot, with growth rates for both output and new orders being the strongest among the three market groups. Capital goods, meanwhile was the weakest link as new business inflows and production fell during October.
“A return to inflationary pressures, meanwhile, indicates that the RBI may pause its loosening cycle for the rest of the year following a 50 bps cut to the key repo rate in September. Upcoming survey data will show how effective the central bank’s effort to revive the economy has been,” she added. (KNN Bureau)
Posting a 22-month low of 50.7 in October (September: 51.2), the seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ IndexTM (PMI)TM – a composite single-figure indicator of manufacturing performance – was indicative of a weaker improvement in business conditions across the sector, said a press release.
Nonetheless, the PMI has recorded above the crucial 50.0 threshold in each month since November 2013.
A figure above 50 represents expansion while one below that means contraction.
Output growth eased in October on the back of a slower increase in new orders. Rates of expansion in both production and order books were the weakest in their current 24-month sequences of growth, with panellists reporting challenging economic conditions and a reluctance among clients to commit to new projects.
Sector data indicated that consumer goods was the best performing category in October, while improving operating conditions were also seen in the intermediate goods sub-sector. Conversely, capital goods firms saw business conditions deteriorate in the latest month as output and new orders declined for the first time since September 2014 and August 2014 respectively.
New business from abroad placed with Indian manufacturers rose for the twenty-fifth straight month in October. However, growth was little changed from the marginal pace seen in September.
Despite the slowdown in new order growth, manufacturers hired additional workers in October. Employment rose for the first time since January, although only marginally.
October saw inflationary pressures return to India’s manufacturing economy. Average purchase costs rose, amid reports of higher metal, paper and food prices.
Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, Economist at Markit and author of the report, said: “PMI data for October show a further loss of growth momentum across the Indian manufacturing economy, with a slower rise in new business inflows resulting in a weaker expansion of output. “Undeterred by tough economic conditions overall, firms took on extra staff in October.
This, combined with a further drop in inventories of finished goods, suggests that production growth may rebound in coming months.
“Looking deeper into the data, consumer goods was – once again – the bright spot, with growth rates for both output and new orders being the strongest among the three market groups. Capital goods, meanwhile was the weakest link as new business inflows and production fell during October.
“A return to inflationary pressures, meanwhile, indicates that the RBI may pause its loosening cycle for the rest of the year following a 50 bps cut to the key repo rate in September. Upcoming survey data will show how effective the central bank’s effort to revive the economy has been,” she added. (KNN Bureau)
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