New Delhi: India’s manufacturing output grew at its slowest pace in 15 months in August, adding to worries about continued weakness in Asia’s third-largest economy, according to a private survey released on Monday.
The seasonally adjusted IHS Markit India manufacturing purchasing managers’ index (PMI), based on a survey of 400 producers, retreated from 52.5 in July to of 51.4, its lowest mark since May 2018, in August, the market information supplier said in a statement. The survey tracks new orders, output, jobs, suppliers’ delivery time and stocks of purchases.
A figure above 50 indicates expansion and below 50 indicates contraction.
“With sales expanding at the slowest rate in 15 months, production growth and job creation were tamed, while factories lowered input buying for the first time since May 2018," said the statement.
IHS Markit said the survey showed a rise in input costs as well as an improvement in business confidence, which strengthened to a 16-month high. It also said anecdotal evidence indicated that competitive pressures and challenging market conditions restricted the upturn. New orders from overseas also increased at a slower rate in August, with growth being the weakest seen since April 2018.
The weakness in the manufacturing sector in August came in the wake of official data showing last month that India’s economy expanded at a six-year low of 5% in the June quarter. The government is taking steps to arrest the economic slowdown by front-loading public spending, improving access to credit for businesses, infusing fresh capital into state-run banks, liberalizing foreign ownership norms and announcing the intention to make infrastructure spending big. The Reserve Bank of India (RBI) has so far cut benchmark interest rates four times since January, bringing the repo rate to 5.4% in August.