New Delhi: Manufacturing sector recovery extended to June on the back of robust demand but price pressures dampened growth.
The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May.
While a reading above 50 shows expansion in manufacturing activities, the print below means contraction.
“Posting 53.9 in June, the seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) signaled a twelfth consecutive monthly improvement in the health of the sector. However, falling from 54.6 in May, the latest reading showed the weakest pace of growth since last September,” the S&P Global survey said.
The private survey said that softer increases in production, factory orders, stocks of purchases, and employment all dragged down the PMI in June, alongside an improvement in supplier performance which is inverted before entering the calculation.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence said that the Indian manufacturing industry ended the first quarter of the fiscal year 2022-23 on a solid footing, displaying encouraging resilience in the face of acute price pressures, rising interest rates, rupee depreciation, and a challenging geopolitical landscape.
“Yet, there was a broad-based slowdown in growth across a number of measures such as factory orders, production, exports, input buying, and employment as clients and businesses restricted spending amid elevated inflation,” De Lima said.
The economist noted that there was positive news regarding supply chains with the latest results showing the first shortening of input lead times since the onset of COVID-19.
“This seemed to have curbed the upward pressure on input costs, with purchase prices and output charges increasing at sharp but slower rates during June. Companies nevertheless remained very concerned about inflation, a key factor that dragged down business confidence to a 27-month low,” De Lima said.