India manufacturing PMI rises slightly in May

For the fifth consecutive month, business conditions throughout India’s manufacturing industry rebounded. The Nikkei India Manufacturing Purchasing Managers’ Index slightly rose to 50.7 in May from April’s 50.5. Volumes of order book rose in May after remaining stagnant in the prior month. However, the rate of growth was quite marginal and much lower than the long-run average.

The data suggests that growth was concentrated on the domestic market as new businesses from outside the country declined. This was the first time since September 2013 that new export orders dropped. According to survey participants, this was due to weak global demand.

Goods manufacturers increased their volumes of output for the fifth consecutive month in May. While higher production was attributed to the rise in order books, there were talks that growth was hindered by the assembly elections in some regions, said Markit.

The PMI data shows that producers in India had enough resources to work on on-going projects as outstanding business dropped in May. A growth in workforce sizes helped reduce the overall backlogs. Nevertheless, the pace of job creation was just marginal. Average cost burdens additionally increased in May amidst reports of higher prices paid for a range of raw materials, noted Markit. Meanwhile, producers bought additional inputs in May. Simultaneously, there was an increase in pre-production inventories, though slightly. On the contrary, finished goods holdings dropped for the eleventh straight month.

Intermediate goods were emphasized as the best performing category in May. New orders and output growth rate were more robust than the ones witnessed amongst consumer goods producers. In contrast, investment goods companies witnessed additional declines in production and new work.