Amid stalling demand and heightened inflation, the attitude among Indian manufacturers stays grim. The seasonally revised S&P Global India Manufacturing Purchasing Managers’ Index (PMI) fell to 53.9 in June from 54.6 in May. A reading above 50 implies growth and one below the boundary points to a contraction. The headline index stays in the expansion zone, but the latest figure is the lowest since September the previous year.
Few moderations were seen in cost inflation, with the vital input price index declining to a three-month low. Still, one should not applaud this softening yet, provided that the index stays above its long-term average. “Monitored firms have observed boosts for a vast range of inputs comprising chemicals, electronics, power, metals, and textiles, which they partially passed along to clients in the form of expanded selling costs,” announced the survey summary.
“Nonetheless to add that the gradual growth in demand and the initial reduction in suppliers’ delivery period since February 2021 is possible to have played a vital part too,” he said in a report. Hoyes speculates that as inflation proceeds to weigh on manufacturers’ enthusiasm, the Indian economy is by no means out of the woods on the inflationary front.
Business optimism assessed via the future output index glid to a 27-month low of 50.9 in June. Unfortunately, economists do not detect leisure from cost inflation for Indian manufacturers in the near term. “During that moment, it is considered to be too quick to conclusively assert that things are getting good on the inflation front for Indian producers. The tax differences which declared on Friday will have some inflationary impact too,” added Rahul Bajoria, the managing director and chief India economist at Barclays. The government has assigned special extra excise duty on the export of petrol and diesel and also boosted the import duty on gold.
The costs of some food commodities such as palm oil and soybean have reduced, Bajoria said. Regardless, the pass-through into inflation will seize some time. “So, though we are not feeling an incremental inflationary pressure, it would seize time for inflation to decrease meaningfully,” he said.
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