Tokyo [Japan]: Indian manufacturing sector experienced a slowdown in March with softer upturn in sales dragging output growth to a six-month low, Nikkei Asian Review said on Tuesday.
This was accompanied by subdued inflationary pressures, with rates of increase in input costs and output charges below their respective long-run averages.
The Nikkei India Manufacturing Purchasing Managers Index (PMI) registered 52.6 in March. Although above the line of expansion, it fell from 54.3 in February to a six-month low.
Readings above 50 point to expansion while those below 50 indicate contraction.
“There was a widespread slowdown in growth where softer increases were registered for new orders, production, input buying and employment. The increase in new orders was the slowest in six months, competitive conditions and the upcoming elections reportedly curbing the upturn,” according to an official statement.
However, firms indicated that strong underlying demand, successful advertising and the receipt of bulk orders underpinned sales growth.
“Although global headwinds and a general slowdown in trade present some concerns for the future health of Indian manufacturers’ order books, so far companies have been able to weather the storm and secure healthy inflows of new work from abroad,” said Pollyanna De Lima, Principal Economist at IHS Markit which compiles the survey.
“On the other hand, we expect stock-building efforts in the coming months and robust business sentiment to support output growth and further lift payroll numbers,” she added.
“Expansionary public policies such as fiscal stimulus and interest rate reduction should also assist the manufacturing sector in gaining some traction in the near term,” said Pollyanna.