Manufacturing PMI begins FY15 on a stagnant note

Last Updated: Fri, May 02, 2014 09:35 hrs

Manufacturing activities remained stagnant in the first month of the current financial year, as per the widely tracked HSBC purchasing managers' index (PMI).
PMI stood intact at 51.3 points in April, same as March. A reading above 50 denotes expansion and the one below implies contraction.

Both manufacturing output and new order growth eased further in the month, even as factories across the country continued to report improving operating conditions, said Markit Economics, a financial information firm which compiles the data.

However, manufacturing production rose for the sixth successive month in April, amid reports of improved new business inflows. "Nonetheless, growth of output waned on the back of competitive pressures and power outages," Markit Economics said.

Also, stronger demand drove new orders received by Indian manufacturers further in April. "That said, the overall pace of expansion eased slightly since March, as increased competition for new work and the elections reportedly hampered growth" the financial information firm said.

Sector data highlighted higher production in two of the three monitored categories, namely consumer and intermediate goods. However, a reduction was noted in the investment goods sub-sector.

In the official index of industrial production (IIP) data, it was, however, consumer goods, paticularly durable ones, which continued to post lacklustre production numbers till February of 2013-14. In February, the latest reading, saw consumer durables production contracting 9.3%.
The PMI survey said growth of new export orders eased from March's 35-month peak to the slowest since January. "Overseas demand improved at consumer and intermediate goods firms, whereas capital goods producers recorded lower foreign orders in April."

If it is reflected in official exports figures as well, the outbound shipments in April may remain dismal after contraction for two months in a row -- February and March.

PMI survey indicated no change in employee headcounts since March.

Output inflation was only marginal and together with input one the joint rate of price rise was the weakest in 11 months.

Leif Eskesen, Chief Economist for India & ASEAN at HSBC, however, cautioned," Encouragingly, inflation pressures eased, but that does not mean that the RBI can take down its inflation guards."

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