Factory output hits 9 month low in June amid price pressure

BENGALURU: India’s factory output expanded at its slowest pace in nine months in June as elevated price pressures continued to dampen demand and output, according to a private survey, which also showed business confidence was at its lowest in over two years.

Although inflation eased in May to 7.04 per cent after touching an eight-year high of 7.79 per cent in April, a meaningful decline is not seen anytime soon even as the Reserve Bank of India is expected to continue with aggressive rate hikes. While the Manufacturing Purchasing Managers’ Index, compiled by S&P Global, remained resilient, it fell to a nine-month low of 53.9 in June from May’s 54.6, lower than a news agency poll median prediction of 54.5.

It has been above the 50-level separating growth from contraction for a year, indicating growth in the sector has remained solid.

“The Indian manufacturing industry ended the first quarter of fiscal year 2022/23 on a solid footing, displaying encouraging resilience in the face of acute price pressures, rising interest rates, rupee depreciation and a challenging geopolitical landscape,” noted Pollyanna De Lima, economics associate director at S&P Global Market.

“Yet, there was a broad-based slowdown in growth across a number of measures such as factory orders, production, exports, input buying and employment as clients and businesses restricted spending amid elevated inflation.”