Business activity in India’s manufacturing sector further slowed in April, but still held in the expansion zone. The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) declined from 52.6 in March to 51.8 in April.

A reading above 50 indicates expansion, while a one below that threshold points to a contraction.

Exports were one bright spot in the April PMI, expanding at a quicker pace than in the previous month. Not just in India have exports increased, though modestly, but in other emerging nations as well.

According to the PMI survey, South-East Asian companies saw the first improvement in new exports for the first time since July 2018 (see chart).

Commenting on the Asean Manufacturing PMI survey data, David Owen, economist at IHS Markit, which compiles the survey, said: “New export orders rose for the first time since last July, albeit at a fractional pace. This supported the quickest increase in total new orders for seven months, lending some optimism to manufacturers that have been noticeably affected by the ongoing trade war."

Asean is an acronym for the Association of South-East Asian Nations. It includes Malaysia, Indonesia, Thailand and Singapore, among others.

For these countries, the future output sub-index—a gauge of business expectations for the coming 12 months—has improved from 65.4 in March to 66.6 April.

While this is a positive sentiment, its continuation is the key. It is no news that global growth is softening, and that could weigh on new export orders. Also, uncertainties regarding the trade wars persist.

It should be noted that the International Monetary Fund (IMF) recently downgraded its outlook regarding the global economy for the third time since October. IMF anticipates the global economy to grow 3.3% this year. This is the slowest expansion since 2016. Also, the present forecast is a 0.2-percentage point cut from its earlier estimate, released in January.

On the other hand, optimism about business outlook among Indian manufacturers contracted. The future output sub-index fell from 60.3 in March to 56.6 in April.

According to Pollyanna de Lima, principal economist at IHS Markit and author of the India PMI report: “Although remaining inside expansion territory, 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.

“When looking at reasons provided by surveyed companies for the slowdown, disruptions due to the elections were a key theme. Also, firms seem to have adopted a wait-and-watch approach on their plans until public policies become clearer upon the formation of a government," she added.