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India’s industrial production is improving, manufacturing PMI reached 54.7 in April

India's industrial production is improving, manufacturing PMI reached 54.7 in April - (A)

The S&P Global India Manufacturing Purchasing Managers’ Index (PMI) rose to 54.7 in April from 54.0 in March.

A reading above 50 indicates an expansion of activity, while a pressure below 50 is a sign of contraction.

According to IHS Markit, the author of the PMI, Indian manufacturing activity saw a strong rise in new orders and output in April, with international sales making “solid” progress after contracting for the first time in nine months in March.

“Factories continued to increase output at a higher-than-trend rate, with continued increases in input sales and purchases, suggesting that growth will continue in the near term,” said Pollyanna De Lima, associate trading director at S&P. Global.

IHS Markit completed its merger with S&P Global on February 28, resulting in the rebranding of the PMI for India and some other countries.

Manufacturers continued to stockpile supplies, with April posting the biggest increase since November.

The improvement in activity levels had little impact on manufacturing employment, as most companies reported that their workforce levels were flat in April due to weak capacity pressures. In general, however, there was a “slight increase” in employment during the last month.

Concerns remained on the pricey side. Manufacturers saw higher costs for chemicals, electronics, energy, metals, plastics, and textiles compared to March. Higher transportation costs and the Russian-Ukrainian war were cited as the main reasons behind input cost inflation, which hit a five-month high in April.

Consumers have also felt rising prices, as manufacturers pass off some of the increased cost burdens. Sales price inflation thus reached its highest level in a year.

“This growing pressure on prices could reduce demand, as companies continue to share additional cost burdens with their clients,” De Lima added.

The rise in consumer prices will come as no surprise, as consumer price index (CPI) inflation hit a 17-month high of 6.95% in March, data released for the month showed. Economists expect CPI inflation to have topped 7% in April, further embarrassing the Monetary Policy Committee of the Reserve Bank of India.

Expectations are growing that the interest rate group will start raising the key repo rate in June in a bid to ease inflationary pressures and stay within its mandate.

The Committee is considered not to have fulfilled its mandate if average CPI inflation is outside the 2-6% range for three consecutive quarters.

Inflation averaged 6.3% in January-March. The latest central bank forecast puts CPI inflation on average at 6.3% in April-June and at 5.8% in July-September.

reading above 50 indicates an expansion of activity, while a pressure below 50 is a sign of contraction.

According to IHS Markit, the author of the PMI, Indian manufacturing activity saw a strong rise in new orders and output in April, with international sales making “solid” progress after contracting for the first time in nine months in March.

“Factories continued to increase output at a higher-than-trend rate, with continued increases in input sales and purchases, suggesting that growth will continue in the near term,” said Pollyanna De Lima, associate trading director at S&P. Global.

IHS Markit completed its merger with S&P Global on February 28, resulting in the rebranding of the PMI for India and some other countries.

Manufacturers continued to stockpile supplies, with April posting the biggest increase since November.

The improvement in activity levels had little impact on manufacturing employment, as most companies reported that their workforce levels were flat in April due to weak capacity pressures. In general, however, there was a “slight increase” in employment during the last month.

Concerns remained on the pricey side. Manufacturers saw higher costs for chemicals, electronics, energy, metals, plastics, and textiles compared to March. Higher transportation costs and the Russian-Ukrainian war were cited as the main reasons behind input cost inflation, which hit a five-month high in April.

Consumers have also felt rising prices, as manufacturers pass off some of the increased cost burdens. Sales price inflation thus reached its highest level in a year.

“This growing pressure on prices could reduce demand, as companies continue to share additional cost burdens with their clients,” De Lima added.

The rise in consumer prices will come as no surprise, as consumer price index (CPI) inflation hit a 17-month high of 6.95% in March, data released for the month showed. Economists expect CPI inflation to have topped 7% in April, further embarrassing the Monetary Policy Committee of the Reserve Bank of India.

Expectations are growing that the interest rate group will start raising the key repo rate in June in a bid to ease inflationary pressures and stay within its mandate.

The Committee is considered not to have fulfilled its mandate if average CPI inflation is outside the 2-6% range for three consecutive quarters.

Inflation averaged 6.3% in January-March. The latest central bank forecast puts CPI inflation on average at 6.3% in April-June and at 5.8% in July-September.

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