Manufacturing PMI reaches 31-month high in May ‘23

India’s manufacturing sector rose to a 31-month high last month, with the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) climbing from 57.2 in April to 58.7 in May 2023, fueled by robust demand. 

This marked the 23rd consecutive month that the index remained above the growth threshold of 50, highlighting the sector’s sustained expansion. The manufacturing industry has played a significant role in driving India’s economy, with solid growth observed over the past few quarters. A report from S&P also highlighted a rise in employment opportunities within the sector during May.

The PMI data showed that new orders grew at the fastest pace since January 2021, and foreign demand experienced its most rapid growth in six months. These higher orders led to a significant acceleration in purchasing activity, reaching its highest level in over 12 years.

In contrast, neighbouring countries such as China, Japan, and South Korea have encountered prolonged struggles in their manufacturing sectors. Experts emphasized the positive implications of rising domestic orders for India’s economy. Additionally, increasing international business relationships are enhancing India’s standing in the global market.

In March, India’s factory output growth slowed to a five-month low of 1.1%, a substantial drop compared to February 2023’s 5.8% growth rate. This decline resulted from a global slowdown in demand and an excess of inventory, both of which hampered manufacturing activity in the country.

Economists expressed concerns regarding the deceleration of manufacturing growth, emphasizing the importance of domestic consumption demand given the anticipated weakness in external demand.

Source: Mint