Manufacturing PMI falls but still above long-term average

Amid a pleasant symphony of the zooming stock market and expected high economic growth, India’s manufacturing has sounded a discordant note, falling to 57.5 in May from 58.8 in April. The fall is attributed to the widespread heat-waves.

The HSBC Purchasing Managers' Index (PMI), while on a lower side, is still about four points higher than its long-run average. And it is well above 50, the mark which separates growth in manufacturing from decline. The long-run average is 53.9.

“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panelists cited heat-waves as a reason for lower work hours in May, which may have affected production volumes,” Maitreyi Das, global economist at HSBC, told the media.

Indian manufacturers have reportedly expressed the highest level of positive sentiment towards growth prospects in nearly nine-and-a-half years, fuelled by advertising and innovation, alongside expectations that economic and demand conditions will remain favorable.

Also, ongoing strong sales performances, along with upbeat growth forecasts, fuelled job creation in May. Manufacturing employment rose to one of the greatest extents seen since data collection started in March 2005.