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2 July 2018
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Manufacturing sector (The Total Investment & Insurance Solutions)
The
country's manufacturing sector activity in June grew at the strongest pace this
year, supported by rise in domestic and export orders, says a monthly survey.
The
Nikkei India Manufacturing Purchasing Managers Index (PMI) rose from 51.2 in
May to 53.1 in June, registering the fastest improvement since December 2017.
This
is the 11th consecutive month that the manufacturing PMI remained above the
50-point mark. In PMI parlance, a print above 50 means expansion, while a score
below that denotes contraction.
"India's
manufacturing economy closed the quarter on a solid footing against a backdrop
of robust demand conditions, highlighted by the sharpest gains in output and
new orders since last December," said Aashna Dodhia, Economist at IHS
Markit and author of the report.
Reflecting
greater production requirements, manufacturing firms were encouraged to engage
in purchasing activity and raise their staffing levels.
"On
the jobs front, the latest survey data pointed to a healthy labour market, with
job creation accelerating to the sharpest since December 2017," Dodhia
said.
On
the price front, input cost inflation and output charges rose at a stronger
pace, indicating that the central bank might tighten the monetary policy.
"Input
cost inflation quickened to the strongest since July 2014 in June, suggesting
that the central bank could remain under pressure to tighten monetary
policy," Dodhia added.
In
June the Reserve Bank of India had upped its retail inflation projection by
0.30 percent and kept the policy stance in the neutral zone, even as it hiked
the key rate by 0.25 percent to 6.25 percent.
Meanwhile,
business confidence eased to the weakest since last October, and the dip in
optimism partly reflected concerns of a potential market slowdown in the year
ahead.
"Indeed,
some of the key challenges to the 12-month outlook include tighter domestic
monetary policy and persistently high inflation," Dodhia said.The Total Investment & Insurance
Solutions
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