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Manufacturing growth held steady in May, as export orders hit an 11-year high and companies could secure new deals, despite increasing selling prices at the fastest pace in eight-and-a-half years, with input costs rising. Customers to pass the spike in burden.
The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) eased slightly to 54.6 in May from 54.7 in the previous month. But according to a release from S&P Global, it remains well above the trend average, pointing to “continuous improvement across the region.” An index reading of 50 or higher indicates expansion and below it indicates contraction. With this, the index has remained in the expansionary zone for the 11th consecutive month.
The elevated PMI bodes well for a rebound in the manufacturing sector in the June quarter, as the latest GDP data showed the sector declining 0.2% year-on-year in the three months to March, albeit on a favorable basis. is on.
“Although softer than in April, inflation remains historically high,” the release said. “Business sentiment was dampened by inflation concerns in May, with overall confidence levels the second lowest in just over two years.”
Input costs rose for 22 consecutive months in May, with companies reporting higher prices for electronic components, energy, goods, foodstuffs, metals and textiles.
However, on the back of strong sales, jobs in the manufacturing sector increased further in May. Although only modest, the rate of employment growth reached its strongest level since January 2020.
Despite another uptick in selling prices, demand showed signs of resilience in May, improving further. The companies reported a significant increase in total new orders, which was roughly the same as in April.
Manufacturers continued to ramp up production in May, amid reports of new business gains, continued recovery in demand and loosened COVID-19 restrictions.
Poliana de Lima, economics associate director at S&P Global Market Intelligence, said: “While firms are focused for now, the gauge of trade optimism in the survey reflects a sense of unease among manufacturers. The overall level of sentiment is the second for two years. The lowest was seen, with panelists generally expecting intense price pressures to hurt growth prospects.
Capacity pressure among commodity producers eased in May, as reflected in a marginal increase in outstanding business volumes.
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