Indian manufacturing growth lost momentum in September: PMI

Indian manufacturing growth saw a loss of momentum in September 2015, resulting in slower increase in new orders, reduced staffing levels and the weakest purchasing activity since December 2013, revealed a leading international business survey on Thursday.

The Nikkei India Manufacturing Purchasing Managers Index (PMI) recorded a seven-month low at 51.2 in September, down from 52.3 in August. An index r

According to the PMI report published by leading diversified financial information services provider Markit, the reading index, in which a value above 50 indicates an overall increase in the manufacturing sector and below 50 an overall decrease, was consistent with a marginal improvement in business conditions across sectors.

The PMI based on data compiled from monthly replies to questionnaire sent to purchasing executives in over 300 industrial companies noted that September data pointed to the weakest rise in production since May 2014, with the slowdown evident across the three broad areas of the manufacturing economy.

"Despite having been supported by sustained increases in new work, growth of Indian manufacturing production in September was weighed down by a difficult economic climate," said Pollyanna De Lima, an economist at Markit.

The report cited that new business from abroad expanded at the slowest pace in the current 24-month sequence of growth and one that was marginal overall. Managers also reported softer global demand for their goods.

According to the index, Indian manufacturers shed jobs in September due weaker increases in new business inflows and cautious approach to costs.

"Slower increases in new business inflows have hindered firms' ability to recruit. The sector's labour market was squeezed in September as companies attempted to minimize operating costs," added De Lima.

PMI noted lack of pressure in operating capacity and unchanged rate of reduction in backlogs in September.

According to the index, September data also highlighted the first back-to-back input prices decline since the financial crisis while overall reduction in costs reflected falling commodity prices.

As per the data, lower input costs cascaded on to clients from Indian manufacturers with selling prices falling again in September.

Though holding of raw materials and semi-manufactured goods rose, post production inventories declined September.

In September, stocks of purchases grew at the slowest rate in the current 16-month sequence of accumulation reflecting slower increase in buying levels, noted the PMI, a composite index based on five of individual indices - new orders, output, employment, suppliers' delivery times, stock of items purchased and the overall delivery times.

Under the PMI, manufacturing sector is divided into 8 broad categories of basic metals, chemicals and plastics, electrical and optical, food and drink, mechanical engineering, textiles and clothing, timber and paper and transport.