India’s manufacturing sector inched up in June amid indications of better business conditions, the latest Purchasing Managers’ Index (PMI) survey showed, but analysts cautioned that the devil lay in the details that were not encouraging.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) — a measure of factory production — improved to 55.0 in June, from 54.8 in May.
These provide an advance indication of what is really happening in the private sector economy by tracking variables such as output, new orders, stock levels, employment, suppliers’ delivery time and prices across the manufacturing, construction, retail and service sectors.
The survey indicated that output prices increased as Indian manufacturers attempted to pass on further rise in the cost of inputs to their clients. “Moreover, firms in India reported that charges also increased in line with more expensive labour costs. Input prices continued to increase, extending the inflationary period to 39 successive months,” the report stated.
The PMI survey said that the inflation rate during the month was sharp and the largest since August 2011.
“The details were not very encouraging. Both the new export orders indices fell, suggesting that domestic and external demand remains subdued,” said Sonal Varma, chief economist at Nomura India, a global broking and research firm.
India’s industrial output grew just 0.1% in April adding to mounting woes for government’s economic managers battling domestic political compulsions and a sputtering world economy.