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Cost pressures, Pak conflict dampens manufacturing activity in May: PMI
Curbed by cost pressures, fierce competition and the India-Pakistan conflict, India's manufacturing activity decelerated in May, growing at its slowest pace in three months, according to a private survey released on Monday.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April.
'May data indicated another robust improvement in business conditions across India's manufacturing industry. Although rates of increase in new orders and output retreated to three-month lows, they remained well above their respective long-run averages,' the survey said.
Respondents suggested that strong demand continued to support sales and production, though competition, inflation, and the India-Pakistan conflict had weighed on growth. Goods producers increased input purchases and hiring, with the latter seeing a record rise.
Meanwhile, input cost inflation climbed to a six-month high, prompting one of the sharpest increases in selling prices in nearly 11-and-a-half years.
'New export orders rose at one of the strongest rates recorded in three years. Panel members cited favourable demand from Asia, Europe, the Middle East and the US,' the survey added.
Pranjul Bhandari, chief India economist at HSBC, said India's May manufacturing PMI signalled another month of strong growth, even though the pace of expansion in output and new orders eased compared to April.
'The acceleration in employment growth to a new peak is certainly a positive development. Input cost inflation is picking up, but manufacturers appear able to ease pressure on margins by raising output prices,' she said.
On the jobs front, firms hired additional staff in May, with the rate of job creation rising to a record high. Among the 12 per cent of respondents reporting higher headcounts, permanent hires were more common than temporary ones.
'Sustained job creation enabled manufacturers to stay on top of their workloads in May. Outstanding business volumes were unchanged, ending a six-month period of accumulation,' the survey noted.
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