Manufacturing PMI Slightly changed in May

The S&P Global India Manufacturing Purchasing Managers’ Index measures the performance of the manufacturing sector and is derived from a survey of 500 manufacturing companies. The Manufacturing Purchasing Managers Index is based on five individual indexes with the following weights: New Orders (30 percent), Output (25 percent), Employment (20 percent), Suppliers’ Delivery Times (15 percent) and Stock of Items Purchased (10 percent), with the Delivery Times index inverted so that it moves in a comparable direction. A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.

The S&P Global India Manufacturing was little-changed to 54.6 in May from 54.7 in April, compared to market consensus of 53.8. The latest reading marked the 11th straight month of expansion in the manufacturing sector, as both output and new orders grew at the same pace in the prior month, with new export orders rising to the fastest since April 2011, amid loosening of Covid-19 restrictions. At the same time, input purchasing rose sharply and the quickest since last November, with supplier delivery times further lengthening; and employment increased to the strongest since January. On the price side, input prices continued to rise due to higher prices in electronic components, energy, freight, foodstuff, metals and textiles. Meanwhile, output price inflation accelerated to over eight-and-a-half years, as companies continued to transfer additional cost burdens to their clients. Finally, sentiment weakened to the second-lowest in just over two years on inflationary concerns.

Manufacturing PMI in India averaged 52.06 points from 2012 until 2022, reaching an all time high of 58.90 points in October of 2020 and a record low of 27.40 points in April of 2020. 

May data also highlighted a notable uptick in growth of new export orders. The rate of expansion was sharp and the fastest since April 2011. Amid reports of new business gains, sustained improvements in demand and looser COVID-19 restrictions, manufacturers continued to scale up production in May. The rate of growth was marked, above trend and broadly in line with that recorded in April.