Manufacturing growth fell to a nine-month low in June. | So Good News

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Growth in India’s manufacturing sector fell to a nine-month low in June as high inflation dampened orders and demand for manufacturing and indicated that a full economic recovery would take longer than expected.

Inflation worries weighed down by global geopolitical tensions weighed on business sentiment, which fell to a 27-month low last month.

The purchasing managers’ index (PMI) produced by S&P Global India fell to 53.9 points in June from 54.6 points in May.

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It was 12 consecutive months of growth.

A reading over 50 means amplification. The latest PMI increase was the slowest in three months.

Production factory orders; Purchases and employment growth slowed in June.

“Indian manufacturing ended the first quarter of fiscal 2022-23 on a strong footing, showing resilience in the face of strong price pressures, rising interest rates, a depreciating rupee and a challenging geopolitical landscape. S&P Global Intelligence Associate Director Polly Lima said while growth in multiple measures such as factory orders, output, exports, input purchases and employment slowed, consumers and businesses restrained inflation.

But on the brighter side, For the first time since the outbreak of the pandemic, the delivery time has been shortened.

“This appears to be increasing pressure on import costs as purchasing prices and output increased significantly during June. “However, companies are still very concerned about inflation, a key factor dragging business confidence down to a 27-month low,” De Lima said.

New export orders rose for a third straight month in June, but fell short of the 11-year high posted in May. Employment rose for four consecutive months, albeit at a modest pace consistent with those seen over this period. Limited job creation; It grew at the slowest rate in three months.

Last month, the Union government announced plans to curb inflation, including a sharp reduction in central duty on fuel. 8 per liter and at the rate of diesel. At 6 per litre, it is close to the exchequer. 1 trillion in revenue per year.

However, unbranded and prepackaged foods; Increase in GST rates on certain products, including lower tax rates than LED bulbs and hotels; 1,000 per night is likely to further fuel inflation and hurt the purchasing power of middle-class households.

India’s retail inflation, measured by the Consumer Price Index (CPI), has reached a historic high of over 7% and is expected to remain high in the coming months. Inflation numbers are now above the Reserve Bank of India’s upper limit of tolerance of 2-6%.

The Reserve Bank of India-led Monetary Policy Committee raised the repo rate by 90 basis points for two consecutive months in May (cyclical policy review) and June, raising the repo rate to 4.9%.

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