Graphic: Mint
Graphic: Mint

India PMI data: Confidence subdued despite input cost savings

Uncertainty surrounding the outcome of 2019 Lok Sabha elections this year is weighing on business optimism. Consequently, companies are delaying hiring plans

Nikkei’s Purchasing Managers’ Index (PMI) stood at healthy levels of 53.2, although it fell from the 11-month high of 54 in November. A reading above 50 indicates expansion, while one below that threshold points towards a contraction. Besides, input cost inflation declined to a 34-month low in December.

However, the level of confidence has moderated and remains subdued in the context of historical survey data, IHS Markit said in its survey report. Uncertainty surrounding the outcome of the Lok Sabha elections this year is weighing on business optimism. Consequently, companies are delaying hiring plans.

Commenting on the Indian Manufacturing PMI survey data, Pollyanna De Lima, principal economist at IHS Markit and author of the report, said, “Job creation weakened, with companies perhaps cautious about making hiring decisions ahead of next year’s elections and a less upbeat optimism towards the outlook."

Previous survey reports had pointed that surging crude oil prices were pushing operating costs higher for manufacturers, thus hurting their margins. So, softening inflation comes as relief to manufacturers battling margin compression. A stabilizing rupee has also aided companies’ dependence on imports to meet their raw material requirements.

But that alone has not been enough to lift manufacturers’ spirits. In spite of easing input cost pressures, companies refrained from raising output prices. Firms refrained from hiking prices because of worries about its impact on demand, suggested the report.

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