India’s manufacturing activity strengthened in July, led by a pickup in demand, improved output and new orders.
The Nikkei India Manufacturing Purchasing Managers’ Index rose to 52.5 in July from 52.1 in June, staying above the 50-point mark that separates expansion from contraction.
The stable manufacturing performance in July comes despite a dismal growth in infrastructure and sluggish car sales.
India’s largest car maker Maruti Suzuki reported a sharp 33.5% decline in sales in July. Automobile sales have been falling every month for almost a year, except for October, when the numbers were nearly flat.
Companies scaled up production in response to a quicker upturn in factory orders last month. This, aided by optimistic growth projections, underpinned job creation and an uptick in input purchasing. According to the report, producers faced a slight growth in input costs in July led by higher prices of steel, chemicals, cotton and freight but overall inflation stood at a three-month low.
The Reserve Bank of India is expected to cut interest rates for the fourth time in a row when its monetary policy committee meets from August 5-7.
Though manufacturing growth has recovered some momentum, it is still below the long-run trend levels.
Consumer goods led the upturn in July, as in the past two months, through a pickup in new orders, output and employment. Intermediate goods producers saw stronger improvement in business conditions.
Activity in the capital goods sector, however, contracted last month. “The capital goods sub-sector dipped into contraction, with lower sales causing reductions in output and quantities of purchases, while job creation came to a halt,” the study said.
Manufacturers’ confidence levels hit a four-month high in July with producers expecting a surge in demand through marketing efforts.
The demand optimism and bullish growth projections encouraged companies to loosen purse strings and hiring continued in July and additional inputs were purchased.
No comments:
Post a Comment