Manufacturing growth at 4-month high, says HSBC

Domestic and foreign markets demand up

In what could be a signal of pick-up in the manufacturing sector in India, the HSBC India Purchasing Managers’ Index (PMI) rose to a four-month high of 52.6 in May. The HSBC PMI stood at 51.3 in April.

The upturn in the Indian manufacturing sector gathered pace in May, with levels of production and new orders rising at the fastest rates since the opening month of 2015. Meanwhile, a further increase in input costs was seen and, consequently, charges were raised following a decline seen in the preceding month, a release said.

Up to a four-month high of 52.6 in May, from 51.3 in April, the seasonally adjusted HSBC India PMI signalled a further improvement in business conditions. Furthermore, gains were seen in all three monitored sub-sectors, the release said.

Underpinning higher output was improved demand from the domestic and foreign markets.

The total volume of new work received increased for the nineteenth successive month and at the quickest pace since January.

Growth was led by capital goods producers. Overseas demand also rose, although the rate of expansion moderated. This mainly reflected a reduction in foreign orders received by investment goods firms, the release said. However, despite the rise in the manufacturing index, the employment in the sector remained nearly unchanged.

Uptick in growth

Despite the uptick in growth, manufacturing employment was broadly unchanged in May. Over 99 per cent of panellists reported unchanged staffing levels, citing uncertainty about the sustainability of growth, a release said.

“PMI data signal led a further robust expansion of the Indian manufacturing economy in May. Both output and new order growth accelerated to four-month highs, whereas the rise in export orders lost traction. The outlook for the sector is, however, clouded by a stagnant jobs market as firms remain uncertain about the sustainability of the upturn,” Pollyanna De Lima, Economist at Markit, said.

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