Manufacturing rebound continues in May: S&P Global PMI


Producers passed on input costs to customers at the fastest rate since October 2013; export orders increased the most since April 2011

Producers passed on input costs to customers at the fastest rate since October 2013; export orders increased the most since April 2011

Indian manufacturers secured new orders in May at nearly the same rate as April despite rising prices at the fastest rate in more than eight-and-a-half years amid soaring input costs, according to the S&P Global India Manufacturing Purchasing Managers’ Index (PMI).

The index stood at 54.6 in May, down slightly from 57.4 in March. A reading of over 50 on the index indicates growth in activity levels. May marks the 11th month in a row that India’s manufacturing PMI has shown an expansion in activity.

Input costs rose for the 22nd consecutive month in May, with companies reporting higher prices for electronic components, energy, freight, foodstuffs, metals and textiles. Firms have signaled that further price hikes are set to meet those costs, despite resorting to the fastest pace of producer price increases since October 2013.

New export orders from Indian producers, which had fallen in March after eight months of growth, rebounded strongly in May to register the best rate of expansion since April 2011.

Manufacturing jobs rose for the second month in a row, helped by continued improvement in sales and although the pace of job creation was “only light”, it was still the highest since January 2020, S&P Global said.

Despite the overall buoyancy reflected by the index, business sentiment was dampened by inflation fears in May, with overall confidence levels the second lowest in just over two years. Only about 9% of companies surveyed for the PMI expect output growth over the next 12 months, while 88% expect no change from current levels.

“India’s manufacturing sector maintained strong growth momentum in May as total new orders rose further, in part due to the largest increase in international sales in eleven years,” noted Pollyanna De Lima, Managing Director. economics associate at S&P Global, noting that companies have hired additional workers. and replenished input stocks given the resilience of demand.

“While companies appear to be focused on the present, the survey’s business optimism indicator shows a sense of unease among manufacturers. The overall level of sentiment was the second lowest seen in two years, with panelists generally expecting growth prospects to be hurt by strong price pressures,” she added.

The S&P Global India Manufacturing PMI is based on the responses of purchasing managers from a panel of around 400 manufacturers from different industries.

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