Saturday, October 1, 2022

India’s manufacturing sector activity slumps to 15-month low

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New Delhi: Days after the Gross Domestic Product (GDP) dampened spirits, it’s time to swallow more news that point towards a slowdown. India’s manufacturing sector activity slipped to its 15-month low in August, primarily because of a slower increase in sales, output and employment, a monthly survey said on Monday.

The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 51.4 in August, touching its lowest since May 2018.
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The previous lowest stood at 52.5 in July last year. This signifies a widespread lost in momentum.

‘Most PMI indices moved lower’

“August saw an undesirable combination of slowing economic growth and greater cost inflationary pressures in the Indian manufacturing industry,” Pollyanna de Lima, Principal Economist at IHS Markit, said. She added, “Most PMI indices moved lower, including key health-check measures for new orders, output and employment.”

“Another worrying sign was the first drop in input buying in 15 months, which reflected a mixture of intentional reductions in stocks and shortages of available finance,” Lima said. “Until manufacturers are willing to loosen the purse strings, it is difficult to foresee a meaningful rebound in production growth on the horizon,” she added.

Decline in PMI impacted job creation

As manufacturing went down to its lowest in 15 months, production growth and job creation also slumped. The survey said that because of weak sales, manufacturing firms did not replace retirees and voluntary leavers.

Also, factories lowered input buying for the first time since May 2018. The survey said that competitive pressures and challenging market conditions have prevented an upturn. New orders from overseas also went up in August at a slower rate, with growth at its weakest since April 2018.

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