The seasonally adjusted ABN AMRO India Purchasing Managers’ Index (PMI) registered 53.2 in June, from 53.4 in the previous month. This was the lowest reading for three months.
In addition to the headline ABN AMRO PMI – a composite indicator designed to provide a single-figure snapshot of the health of the manufacturing sector – the survey also tracks changes in output, new orders, employment, inventories, prices and supplier delivery times. Index readings above 50.0 signal expansion from the previous month, readings below 50.0 contraction.
Commenting on the latest survey findings, Gaurav Kapur, senior economist at ABN AMRO Bank N.V., said: “While the overall activity in the manufacturing sector is expanding at a healthy pace, a dip in the output and new orders components reflects some moderation on the back of higher interest rates and tighter credit conditions. Easing input cost inflation, however, is an encouraging sign.”
Rising volumes of incoming new orders underpinned the improvement in the manufacturing sector, despite the rate of growth easing since the previous month. Higher new business volumes led manufacturers to expand production at their plants in June, albeit at a slightly slower rate than in the previous month.
Companies hired additional staff in the latest survey period, with the rate of employment growth the fastest for four months. However, the increase in staffing levels remained only modest. Although firms expanded production, unfinished business in the Indian manufacturing sector rose for a third consecutive month in June, albeit only marginally.
Panel members stepped up their input buying in June, in response to higher volumes of incoming new orders and the introduction of new products. Increased quantities of purchases contributed to a further rise in stocks of purchases. Post-production inventory levels also increased, and for the first time in four months.
Average vendor performance deteriorated for the second time in the past three months, as increased quantities of purchases placed pressure on suppliers.
Input price inflation eased to its slowest in the 27-month survey history, although firms continued to report a solid rise in their average costs. Panelists indicated that they had raised their charges in order to pass on increased charges to customers.