Manufacturing PMI at 51.6 in May, indicates sluggish expansion in sector

New Delhi, June 1 (KNN) The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) fell from 51.6 in April to 51.2 in May indicating sluggish expansion in the sector.

Though it doesn’t indicates the contraction as PMI reading is above 50 but it signaled a weaker improvement in Indian manufacturing conditions compared to previous year. This was reflected by weaker expansion in output and new orders and employment.

The survey attributed inflationary pressure a big reason for this as both input and output price inflation picked-up to the strongest since February. Also, business optimism was weak by historical standards.

It also mentioned that purchasing activity declined for the first time in seven months in May, albeit only fractionally.

Stocks of finished goods, on the other hand, declined further in May. Despite easing from April’s survey record, the rate of contraction was sharp.

The report also mentioned that the latest upturn signaled a marginal improvement in the health of the manufacturing sector. However, the rate of increase slowed to a modest pace.

Greater production in consumption and intermediate groups continued to outweigh a decline in investment goods.

 In line with the trend for output, new orders placed at Indian manufacturing companies rose in May. Participating managers suggested that enhanced marketing initiatives supported new client wins.

This PMI index is based on the survey conducted among purchasing executives in over 400 companies. These companies are divided into eight broad categories: Basic Metals, Chemicals & Plastics, Electrical & Optical, Food & Drink, Mechanical Engineering, Textiles & Clothing, Timber & Paper and Transport.