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India's factory growth hits 8-month low in April amid election caution: PMI

Optimism among manufacturing firms ebbed in April as they remain concerned about what policies the new government will adopt when it takes office by end-May

Reuters 

factory
The Nikkei Manufacturing Purchasing Managers' Index fell to 51.8 last month from March's 52.6

India's factory activity expanded at its slowest pace in eight months in April as growth in new orders and output dipped as national got under way, a private business survey found.

Optimism among manufacturing firms also ebbed in April as they remain concerned about what policies the new government will adopt when it takes office by end-May.

The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, fell to 51.8 last month from March's 52.6. It has stayed above the 50-mark separating expansion from contraction for nearly two years.

"When looking at reasons provided by surveyed companies for the (April) slowdown, disruptions arising from the was a key theme," noted Pollyanna De Lima, principal economist at IHS Markit, in a release.

"Also, firms seem to have adopted a wait-and-see approach on their plans until public policies become clearer upon the formation of a government."

Voting in India's multi-stage election began on April 11 and will end on May 19. Votes will be counted on May 23.

A sub-index measuring new orders slipped to 52.9 in April from March's 54.2, the lowest since August, due to a weaker expansion in domestic demand. That had a spillover effect on hiring, which barely increased.

The rate of increase in input costs was its weakest since September 2015 and output prices grew at a slow pace, suggesting overall inflation will remain below the Reserve Bank of India's medium-term target of 4 percent.

"With price pressures in the manufacturing economy cooling and growth losing momentum, it's increasingly likely that the RBI may cut its official rate for a third successive time in June," De Lima said.

First Published: Thu, May 02 2019. 10:43 IST
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