Manufacturing & Service PMI slows down in June
The Nikkei India Manufacturing Purchasing Manager's Index (PMI) fell from 52.6 in May to 51.3 in June. PMI came down due to moderate expansion of manufacturing output, slowest rise in new work since September 2014 and negligible increases in input costs & output charges.
During the month, workforce numbers were unchanged, resulting in stable expenses. The health of the Indian manufacturing economy enhanced marginally in June, but output growth moderated due to weaker rise in new business inflows.The production growth was flattish compared to May and was moderate overall in the month of June. Getting new work orders slowed down since last September. And the new export orders received by Indian manufactures rose continuously for the twenty-first month in June. Both pre and post production stocks increased in June. The growth of stocks of purchases was the slowest in last eight months.
If you see on the price side, June's data set highlighted moderating inflationary pressure. Both input costs and output charges rose at rates below their respective long-run averages. The suppliers’ delivery times were unchanged in the month of June. Backlogs of work rose in June. June month also found delayed payments from clients.
The Nikkei India Service PMI released for June, declined to 49.2 from 51.2 due to “reduction in services activity” and “costs & charges increase at weaker rates”. Basic reason behind drop in services activity was low contracts in new business and also fall in private sector output for first time in 14 months. June's reduction in new work was the quickest since December 2013 due to competitive pressures. Incoming work was also slower this month, despite the lack of incoming work, services companies indicated that outstanding business increased during June and there were delayed payments from clients. Indian service provider marginal raised employment in June.
As per the reports, companies are still hopeful of recovering in coming months with confidence and expecting activity to increase over the coming 12 months. On the positive side, inflation softened in June. Weaker rises in input costs and output charges were seen across both the manufacturing and service sectors. Overall, latest data in the report suggests that RBI’s commitment to support economic growth may result in further rate cuts in its August meeting. However, both manufacturing and service PMI readings signify slowdown in the economy and further worsening the recovery process.