In June, India's mfg sector growth hits 14-month high

Press Trust of India
New Delhi

India's manufacturing sector growth rose to a 14-month high of 58.4 in June marked by improved trends in output and new orders, alongside a record upturn in employment, a monthly survey said on Tuesday. The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index – an indicator of sector performance was 57.6 in May.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction. "India's manufacturing PMI reached a 14-month high of 58.4 in June. Robust end-demand fuelled expansions in output, new orders, and job creation," said Pranjul Bhandari, Chief India Economist at HSBC.

June also saw a quicker upturn in new order inflows. The rate of expansion was the strongest in close to a year. According to panel mem- bers, the increase was supported by marketing efforts and a substantial rise in exports. Indeed, growth of new export orders gained considerable momentum in June.

"To keep up with strong demand particularly from international markets, as evidenced by the substantial rise in new export orders -- Indian manufacturing firms had to tap deeper into their inventories, causing the stock of finished goods to continue shrinking," Bhandari said.

Companies also welcomed one of the fastest increases in external orders in the over 20 years of survey history. Goods producers lifted input buying to the greatest extent in 14 months, which supported a further expansion in stocks of purchases.

"Finally, input prices moderated while average selling prices rose as some manufactur- ers passed on addi- tional cost burdens to clients," Bhandari said. Robust sales boosted hiring among manufacturers, the survey said, adding that employment rose at a record pace, with panel-lists motly pointing to short-term recruitment.