India’s Manufacturing Activity Grows At The Fastest Pace In Six Months

Nikkei India manufacturing Purchasing Manager's Index (PMI) has increased by 1.1 points from 51.2 in May to 53.1 in June, Bloomberg has reported.

The index is an indicator of manufacturing activity in the economy. An increasing PMI is an indicator of rising economic activity in the country. A PMI above 50 indicates an expanding manufacturing activity and PMI below 50 indicates a contracting manufacturing output.

“India’s manufacturing economy closed the quarter on a solid footing against a backdrop of robust demand conditions, highlighted by the sharpest gains in output and new orders since last December. Meanwhile, orders from international markets rose at the strongest pace since February. On the jobs front, the latest survey data pointed to a healthy labour market, with job creation accelerating to the sharpest since December 2017,” Aashna Dhodia, economist at IHS Markit and author of the report was quoted by Reuters as saying.

The report further added that the manufacturing production rose, thereby extending the period of expansion to 11 months and new overseas orders rose for the eighth consecutive month. As a result of stronger demand, firms raised their staffing levels, the report says. The input costs borne by Indian manufacturers rose in June, thereby stretching the period of inflation to 33 months.

However, the report had a caveat for the upcoming months as the author commented that 'business sentiment was at the weakest since October' and listed tighter domestic monetary policy and high inflation as some key challenges.

Interestingly, growth in China's manufacturing sector cooled slightly in June. China’s Caixin/Markit PMI declined to 51.0 in June from May's 51.1.