Amid economic slowdown, India also witnessed a dip in manufacturing activity, which reached a 15-month low in August, as demand and output grew at the slowest rate in a year, a private survey reported today.
In the April-June financial quarter, the GDP growth rate dropped to 5%, the worst in six years, and manufacturing accounts for 17% of India's GDP.
Additionally, input costs rose to a nine-month high but remained below its long-run average. Manufacturing firms also lowered input buying to curb their expenses. The fall was the first in 15 months and the fastest since mid-2017, the report stated.
Most PMI indices moved lower, says IHS Markit Principal Economist
Notably, IHS Markit Principal Economist, Pollyanna de Lima, said, "August saw an undesirable combination of slowing economic growth and greater cost inflationary pressures in the Indian manufacturing industry."
She added, "Most PMI indices moved lower, including key health-check measures for new orders, output and employment. In the former two cases, rates of expansion were particularly weak when we look at the survey history."
Manufacturing firms expect greater output in the year ahead
Speaking about how the slump could be overcome, de Lima suggested, "Until manufacturers are willing to loosen the purse strings, it's difficult to foresee a meaningful rebound in production growth on the horizon."
Manufacturing firms also remained optimistic about seeing a rise in demand and output in the following 12 months.
According to the report, this optimistic sentiment also witnessed a 16-month high.