India’s Manufacturing sector PMI data For June got released
The latest data released on July 3 reveals that India's manufacturing sector activity for June stood at 57.8, slightly lower than May's 31-month high of 58.7. However, it is important to note that a reading above 50 indicates expansion in activity, while a reading below 50 suggests contraction. The robust demand for Indian-made products, both domestically and internationally, has been a driving force behind the manufacturing industry's growth. This positive trend has fueled output, employment, quantities of purchases, and input stocks, instilling greater confidence among manufacturers and paving the way for business investments and job opportunities.
The expansion in manufacturing activity was supported by a significant increase in new work orders, with one of the strongest growth rates since February 2021. While international orders also rose, the pace of growth was slightly slower compared to May. To meet the growing demand, production levels were ramped up at one of the fastest rates seen in the past year and a half. With capacity pressures remaining manageable, manufacturers hired additional workers, similar to the previous month of May.In terms of prices, the strong demand allowed manufacturers to increase selling prices at the highest rate in 13 months. However, input prices saw only mild increases by historical standards, among the lowest seen over the past three years. The Reserve Bank of India and the Monetary Policy Committee may have concerns about the price developments. Despite leaving the policy repo rate unchanged at 6.5 percent in 2023-24, the committee has expressed its readiness to consider further rate hikes if necessary. However, market expectations suggest that early 2024 may see the first rate cuts in nearly three years.The upcoming meeting of the Monetary Policy Committee in August will be closely watched. In the meantime, economists predict that the Consumer Price Index (CPI) inflation for June will slightly increase to around 4.5-4.6 percent from the previous month's 25-month low of 4.25 percent.While the Indian economy is currently experiencing a favorable phase with steady growth momentum, moderated inflation, and stable exchange rates, there are potential risks on the horizon that could disrupt this balance. It is crucial to monitor these factors as they unfold in the coming months.
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