Growth of manufacturing output slows in August, but remains solid
The seasonally adjusted HSBC India Purchasing Managers' Index (PMI) - a figure designed to give an accurate overview of business conditions in the manufacturing sector - dipped slightly from July's 17- month high of 53.0 to 52.4 in August.The latest PMI data highlighted a tenth consecutive monthly improvement in operating conditions in August, as solid output growth was supported by strong expansions in total new orders and business from abroad. Purchasing activity continued to rise, although a second consecutive decline in employment was recorded. Meanwhile, input cost pressures eased slightly following the acceleration seen in July.
Nonetheless, the reading was consistent with a solid improvement in operating conditions. Among the monitored sub-sectors, the best performing was consumer goods, while business conditions deteriorated in the capital goods category.
Output at Indian manufacturing companies rose for a tenth straight month in August, and at the second sharpest rate since February 2013. Anecdotal evidence linked expansions in production to improved order book volumes. Output was reduced in the investment goods sub-sector, in contrast to growth recorded elsewhere. August data also signalled that new orders increased for a tenth month in succession. The rate of growth slowed from July's 17-month peak but remained solid. New work intakes rose in each of the monitored subsectors apart from investment goods.
Similarly, new export orders rose in August, extending the current sequence of growth to 11 months. Surveyed firms pointed to strengthening demand from key export clients as the main reason behind expansions in foreign business.
As a result of continued growth in demand, Indian manufacturers picked up their purchasing activity for a tenth month running in August. By sub-sector, the steepest rise in buying activity was recorded by consumer goods companies, whereas producers of capital goods reported a reduction.
Subsequently, input stocks and post-production inventories held by Indian manufacturers grew in August. Panellists indicated that stocks were increased in order to respond to expansions in new orders. Stocks of purchases and finished goods increased in two of the three surveyed categories, with the exception being investment goods. Conversely, workforce numbers declined for a second successive month in August, albeit at a fractional rate as the vast majority of survey respondents left employment unchanged.
Meanwhile, higher prices paid for raw materials meant that input costs rose strongly in August. That said, the rate of cost inflation slowed from July. Factory gate prices also increased during the month, although the pace of charge inflation at Indian manufacturers was slight overall. Price rises were broad-based by sector, with the sharpest increase recorded in the consumer goods category.
Powered by Capital Market - Live News
