Manufacturing growth eases to lowest since September 2021: S&P PMI

Inflation worries drag sentiment down to 27-month low, with just 4% of firms expecting growth a year from now

July 01, 2022 12:29 pm | Updated 10:03 pm IST - New Delhi

Sales and production across India in June 2022, moderated amid intense price pressures

Sales and production across India in June 2022, moderated amid intense price pressures | Photo Credit: Reuters

Inflation pressures dragged India’s manufacturing sector’s growth down to the lowest level in nine months, and dampened business confidence sentiment to a 27-month low in June, as per the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) which slid to 53.9 from 54.6 in May. 

A reading of 50 on the PMI indicates no change in level of activity from the previous month. “Factory orders and production rose for the twelfth straight month in June, but in both cases the rates of expansion eased to nine-month lows,” S&P Global said in a note. 

Export orders rise

New export orders rose for the third successive month in June and employment rose for the fourth successive month, albeit at a slight pace. While stronger client demand sustained order books, growth was restricted by acute inflationary pressures as per the participants whose inputs are collated for the PMI through a survey.  

The manufacturing sector displayed encouraging resilience on the face of acute price pressures, rising interest rates, rupee depreciation and a challenging geopolitical landscape, said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence Unit.   

“Yet, there was a broad-based slowdown in growth across a number of measures such as factory orders, production, exports, input buying and employment as clients and businesses restricted spending amid elevated inflation,” she noted. 

‘No change in output expected’

Although the outlook for the Indian manufacturing industry remained positive midway through 2022, sentiment slipped to a 27-month low, S&P Global said, with less than 4% of panellists forecasting output growth in the year ahead. The vast majority expect no change in output from present levels a year on, citing inflation as the key concern. 

The rate of input cost inflation faced by producers remained historically high, but was the slowest in three months, as were the pass-through of costs through higher charges to consumers. Firms reported increases for a wide range of inputs, including chemicals, electronics, energy, metals and textiles. 

“There was positive news regarding supply chains, with the latest results showing the first shortening of input lead times since the onset of COVID-19. This seemed to have curbed the upward pressure on input costs, with purchase prices and output charges increasing at sharp but slower rates during June,” Ms. De Lima said. 

“Companies nevertheless remained very concerned about inflation, a key factor that dragged down business confidence to a 27-month low,” she concluded.   

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.