Manufacturing activity slows further in April

NEW DELHI: India's manufacturing activity slowed in April due to a softer increase in new orders, a private survey showed on Thursday. New business growth moderated at the start of fiscal year 2019, curbed by the elections and a challenging economic environment.

The Nikkei India Manufacturing Purchasing Managers' Index, declined to 51.8 in April from 52.6 in March but remained above the reading of 50 that separates expansion from contraction.

“Growth continued to soften and the fact that employment increased at the weakest pace for over a year suggests that producers are hardly gearing up for a rebound," said Pollyanna De Lima, Principal Economist at IHS Markit and author of the report.


Broken down by sector, capital goods was the key source of weakness, recording contractions in new business and output. Growth was sustained at both consumer and intermediate goods makers.

As per the survey report, a softer increase in new orders created a domino effect in the Indian manufacturing industry, restricting growth of output, employment, input buying and business sentiment.

The one bright spot in April was exports, which expanded solidly and at a slightly quicker pace than in March. The overall slowdown in the sector was accompanied by cooling rates of inflation

“With price pressures in the manufacturing economy cooling and growth losing momentum, it’s increasingly likely that the RBI may cut its official rate for a third successive time in June,” De Lima added.

The Reserve Bank of India, which had last month cut interest rates by 0.25%, estimates 2.9-3% retail inflation during April to September because of lower food and fuel prices and expectation of a normal monsoon.

The meteorological department has predicted a near-normal monsoon with expected rainfall at 96% of long period average.