India’s manufacturing growth slowed to a three-month low and fell to 57.5 in May. It was 58.8 in April, the HSBC final India Manufacturing Purchasing Mangers’ Index, compiled by S&P Global showed.
Despite softening, the index remained comfortably above the key mark of 50, separating contraction from expansion for almost three years.
The country’s manufacturing activity remained comfortably above the key mark of 50, which separates expansion in activity from contraction, as well as higher than the long-run average (53.9), data released on June 3 showed.
Factors why India’s PMI fell in May
According to the private survey, India’s manufacturing growth slowed in the month of May as severe heatwave prompted a few companies to reduce working hours, but overall factory activity remained robust, buoyed by strong international sales.
“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panellists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes," Maitreyi Das, Global Economist at HSBC, said.
India, which is Asia’s third-largest economy, often experiences soaring temperatures during May and June. Last month, the temperature rose above 50 degrees Celsius in some northern and western regions.
What supported growth?
“In contrast, new export orders rose at the fastest pace in over 13 years, with a broad-based demand across geography as firms noted gains from customers across several countries in Africa, Asia, the Americas, Europe and the Middle East,” Das further said.
The survey also mentioned that companies showed the highest level of positive sentiment in more than nine years on expectations that demand will remain buoyant.
Growth was also supported by new business gains, demand strength and successful marketing efforts, anecdotal evidence showed.
Indian manufacturers expressed the highest level of positive sentiment towards growth prospects in nearly nine-and-a-half years, fuelled by advertising and innovation, alongside expectations that economic and demand conditions will remain favourable.
With inputs from agencies
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