Manufacturing PMI rises to 52.2 in September on back of new orders

Price pressures intensified ahead of the RBI's monetary policy review as input costs rose the most since June

Manufacturing activity rose in September on the back of new orders from both domestic and foreign markets, showed the widely-tracked Nikkei purchasing managers' index (PMI). This also led to the generation of new jobs, even as September activities were slightly lower than in July. 

At 52.2 points in September, PMI was up from 51.7 in August. A reading below 50 is contraction while a score above that denotes expansion. In July, PMI stood at 52.3 points. 

“Growth of India’s manufacturing sector picked up during the latest survey period, reflective of strengthening demand especially from foreign clients, which helped to drive export growth up to its highest level since the turn of the year,” said Paul Smith, Economics Director at IHS Markit and author of the report.

Meanwhile, price pressures intensified ahead of the Reserve Bank of India’s (RBI’s) monetary policy review as input costs rose the most since June. A strong US dollar and supply shortages had exacerbated high global prices for steel and fuel, the survey noted.

“Output charges increased subsequently, albeit at a rate that remains well below the equivalent measure for input prices,” Smith added. On Wednesday, the Monetary Policy Committee will start deliberation on the fourth bi-monthly monetary policy for 2018-19 and announce its decision on Friday.

“Rising prices continued to weigh on sentiment, with confidence dropping a little to reach a three-month low. Nonetheless, on balance, firms remain confident that output will continue to rise, buoyed by recent new business wins… this will continue over the next 12 months,” Smith said.

Manufacturing firms boosted their workforce amid gains in new work orders. “Staffing levels rose for a sixth successive month and at the fastest rate since June,” the survey said.

It was primarily manufacturing which resulted in the country’s Gross Domestic Product (GDP) growth of 8.2 per cent in the first quarter of the current financial year — a two-year high.