Manufacturing PMI starts FY16 on subdued note

Manufacturing activities, now a focus of the government at the Centre, saw a moderation in growth in April compared to March due to low new orders, showed the widely-tracked HSBc purchasing managers' index (PMI). 

As expansion in new orders slowed, firms did not increase output much and reduced hirings. 

PMI fell to 51.3 points in April from 52.1 in March. However, it was higher than 51.2 points in February. PMI above 50 shows expansion and one below implies contraction. As such, the manufacturing activities have expanded for 18th month in April. 

"Following the solid readings seen in March, the Indian manufacturing economy recorded a growth slowdown during April. Total new orders increased at a weaker pace and, as a consequence, companies reduced staffing levels and raised output to a lesser degree," Markit Economics, a compiler of PMI data, said. 

The data came at a time when official data showed that the output of eight crucial industries, having a weight of almost 38%, declined for the first time in 17 months in March.

Markit Economics further said slow down in expansion of manufacturing activities reflected a softer increase in order book volumes. Higher output was recorded across the categories, with growth strongest at capital goods firms and slowest in the consumer goods sub-sector.

New order volumes continued to rise in April, marking an 18-month expansionary sequence. That said, the rate of growth moderated since March, with data pointing to softening domestic demand and competitive pressures.

Surprisingly, Markit Economics said demand from external markets remained strong, as the level of new export orders increased at a solid pace that was unchanged since the prior month. This is not in sync with export performance so far. The country's merchandise exports fell for the fifth month in March in 2014-15.

However, the PMI survey pointed to development in the direction of exports - Companies reported greater inflows of new business from key export clients, but in particular from those operating in Asia.

Pollyanna De Lima, economist at Markit, said,"A highlight of the latest survey was the strong external market, with the rise in new export business remaining solid."