At 58.7, India’s May manufacturing PMI rises to 31-month high, ETCFO

<p> At 58.7, India's May manufacturing PMI rises to 31-month high</p>
At 58.7, India’s May manufacturing PMI rises to 31-month high

India’s manufacturing sector expanded at the fastest pace in 31 months in May, driven by strong demand and output, a private survey showed on Thursday.

The S&P Global India Manufacturing Purchasing Managers’ Index rose from 57.2 in April to 58.7 in May, indicating the strongest improvement in the health of the sector since October 2020.

The manufacturing PMI has now spent 23 consecutive months above the key level of 50. A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.

“While the upturn in domestic orders strengthens the foundations of the economy, rising external business foster international partnerships and boost India’s position in the global market,” said Pollyanna De Lima, economics associate director at S&P Global.

“Combined, they also generated more employment opportunities in May.”

Data showed new orders expanded at the quickest pace since January 2021, while foreign demand grew at its fastest rate in six months. Higher orders saw the quantity of purchases of items accelerating at the highest pace in over 12 years.

According to the survey report the surge in sales paved the way for stronger increases in production, employment and quantities of purchases. With supply chain-conditions improving further, companies noted a record accumulation in input inventories.

Meanwhile, cost pressures remained historically mild, but demand strength facilitated a solid and quicker increase in output charges.

“Demand-driven inflation is not inherently negative, but could erode purchasing power, create challenges for the economy and open the door for more interest rate hikes,” added De Lima.

Business confidence towards growth prospects improved to a five-month high in May. Publicity and demand resilience were among the reasons cited for upbeat forecasts.

  • Published On Jun 1, 2023 at 12:14 PM IST

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