Manufacturing PMI up in April, but at a slower pace than March

India’s manufacturing activities, now a focus area for the government at the Centre, saw a moderation in growth in April when compared with the previous month, because of lower 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 hiring.

Manufacturing PMI in April fell to 51.3 points from 52.1 in March. But it was higher than the 51.2 points in February. A PMI reading above 50 shows expansion while one below that implies contraction. This was, however, 18th straight month of expansion in the country’s manufacturing activities.

“Following the solid readings seen in March, the Indian manufacturing economy recorded a slowdown in growth during April. Total new orders increased at a weaker rate and, as a result, companies reduced staffing levels and raised output to a smaller degree,” Markit Economics, which compiles PMI data, said.

The PMI data came at a time when official data showed output of eight crucial industries, with a weight of almost 38 per cent, declined for the first time in 17 months in March.

Markit Economics further said a slowdown in expansion of manufacturing activities reflected a softer increase in order book volumes. Higher output was recorded across categories, with growth strongest for capital goods firms and slowest for 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 previous month. This is not in sync with export performance so far. In March, the country’s merchandise exports fell for a fifth month in 2014-15.

However, the PMI survey pointed to interested developments related to exports — companies reported greater inflow of new business from key export clients, particularly 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.”