As per S&P Global India Manufacturing PMI, easing inflation concerns push business sentiment to six-year high
As per S&P Global India Manufacturing PMI, easing inflation concerns push business sentiment to six-year high
Indian manufacturers register fastest growth in production and new orders since August November 2021According to the survey-based S&P Global India Manufacturing Purchasing Managers’ Index (PMI), higher thanks to strong demand conditions and increased export orders.
The seasonally adjusted S&P Global India Manufacturing PMI eased slightly to 56.2 in August from 56.4 in July, indicating the second strongest improvement in operating conditions for producers since last November. A reading of 50 on the PMI indicates no change in the level of activity of the firms.
Input cost inflation, a major concern for producers in recent months on the back of higher global commodity prices, softened to the weakest rate in a year on the back of a cooling in aluminum and steel prices during August, but firms pushed higher freight rates. , labor and material prices continued. For customers at a rate that had changed little since July.
While August marked the fourth consecutive monthly slowdown in input cost inflation, factory gate charges (prices of output) rose at the second weakest pace since April.
With inflation concerns easing, trade sentiment further strengthened from June’s 27-month low, raising the degree of optimism among manufacturers to the highest level in six years. “Strong sales forecasts, new inquiries and marketing efforts boosted confidence in August,” S&P Global said.
“Firms welcomed weak growth in input costs coupled with an increase in production forecasts amid renewed hope that price pressures would help boost demand. Inflation concerns, which had dampened sentiment around mid-year, all but abated in August, as witnessed by a bounce in business confidence to a six-year high,” said S&P Global Pollyanna de Lima, economics associate director for Market Intelligence, commented.
S&P Global said lead times on inputs continued to shorten in August, with the latest improvement in vendor performance marking the biggest improvement in five years. However, manufacturers added their input inventories at the slowest pace in a year, even though the production backlog grew at the fastest rate since November 2020.
Overall, Ms de Lima said Indian manufacturers continued to benefit from the absence of COVID-19 restrictions, which has led to a steady improvement in demand conditions.