India's manufacturing production increases for 8th month: HSBC PMI

India Infoline News Service | Mumbai |

Things are gradually improving in India's manufacturing sector. Output picked up in June, supported by growing order flows, especially from overseas

Growth in the Indian manufacturing economy was maintained in June. Greater domestic and foreign demand led companies to increase production levels further. Buying activity expanded at a faster rate, while employment continued to rise, according to HSBC India Manufacturing PMI (Purchasing Managers Index).
Input cost and output price inflation accelerated over the month, although in both cases the rates of increase were below their respective long-run averages.
Adjusted for seasonal variations, the seasonally adjusted HSBC India Purchasing Managers Index (PMI) rose marginally from 51.4 in May to 51.5 in June. Operating conditions improved for the eighth month in succession, although modestly.
Output expanded at the fastest pace since February, with survey respondents indicating that growth reflected the signing of new contracts. All three broad areas of the manufacturing sector registered higher production volumes, led by consumer goods producers.
New orders increased for the eighth successive month in June. The pace of expansion remained moderate. Panellists reported stronger demand from both domestic and foreign clients. By sub-sector, the sharpest rise was noted at consumer goods firms.
June data highlighted a marked and accelerated expansion of new export orders received by Indian manufacturers. Having surpassed the series average, the rate of growth was at a three-month high.
Amid evidence of new order growth and re-stocking efforts, Indian manufacturers raised their quantity of purchases in June. Buying activity increased for the eighth month in succession and at the fastest pace since March 2013.
Concurrently, pre-production stocks rose in June. That said, the rate of accumulation was only slight and weaker than the long-run series trend. Holdings of finished goods also expanded at a slight pace, albeit one that was faster than in May. Higher post-production inventories were linked by respondents to increased production levels.
For the ninth consecutive month, manufacturing employment rose in June. However, the rate of job creation was marginal and slower than in the prior month. Those panellists reporting higher payroll numbers attributed this to the signing of new contracts.
The overall increase in staffing levels was centred on the consumer goods category. Concurrently, pre-production stocks rose in June. That said, the rate of accumulation was only slight and weaker than the long-run series trend. Holdings of finished goods also expanded at a slight pace, albeit one that was faster than in May. Higher post-production inventories were linked by respondents to increased production levels.
For the ninth consecutive month, manufacturing employment rose in June. However, the rate of job creation was marginal and slower than in the prior month. Those panellists reporting higher payroll
numbers attributed this to the signing of new contracts.
The overall increase in staffing levels was centred on the consumer goods category.
Commenting on the India Manufacturing PMI survey, Frederic Neumann, Co-Head of Asian Economic Research at HSBC said: "Things are gradually improving in India's manufacturing sector. Output picked up in June, supported by growing order flows, especially from overseas. The muted pace will suit the RBI: since input and output prices are rising as well, faster growth would only stoke inflation and require tightening."




 

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