Manufacturing sector witnesses growth for the 4th straight month

The Dollar Business Bureau 

India’s manufacturing sector recorded growth consecutively for the fourth month in April, but the rate remained unchanged compared to the previous month, as increase in new orders was balanced by moderate rise in production, according to a survey.

The Nikkei Markit India Manufacturing PMI (Purchasing Managers’ Index) — a manufacturing activity indicator — matched with 52.5 reading of March.

However, the growth was most evident in order books since October last year and fresh export orders surged for the third straight month when the growth rate eased from March.

Recording contraction post-demonetisation, the manufacturing sector witnessed growth for the fourth straight month in April.

A reading on PMI above 50 shows expansion, whereas a score below that mark indicates contraction.

“Buoyant domestic demand coupled with sustained growth of new orders from abroad boosted the upturn in total new business received by Indian manufacturers in April,” said Pollyanna De Lima, Economist at IHS Markit and author of the report.

According to the survey, purchasing costs rose consecutively for the 19th month in April. In the meantime, less than 5% of manufacturers increased their production prices in the given month, whereas around 93% indicated no change in prices.

The Reserve Bank of India (RBI), on April 6, in its monetary policy review meeting kept the repo rate unchanged at 6.25% but raised the reverse repo rate to 6% from 5.75%.

“Scratching beneath the surface we can see that consumers were the key drivers of growth as consumer goods producers registered by far the steepest expansions in both production and new orders,” Lima said.

Lima further stated that manufacturers in India believe output is likely to remain on increasing trend amidst the reports of aggressive marketing campaigns, planned capacity expansions, new product launches and improving economic outlook.