India’s Manufacturing Activity At Five-Month Low: Survey

India's manufacturing activity fell to a five-month low as factory output and new business orders rose at their slowest pace since October.

The Nikkei India Manufacturing Purchasing Managers' Index rose to 51.0 in March compared to 52.1 in February, according to a statement by IHS Markit, which compiles the index. A reading below 50 indicates contraction and a number above it signals expansion.

This is the eighth straight month of expansion for the Indian manufacturing sector as it recovered from the GST-led disruptions backed by favourable growth in demand.

While the new businesses growth at manufacturing companies rose for fifth straight month, business sentiment remains weak, IHS Markit statement said. Firms also reduced their payroll numbers for the first time in eight months.

The slower growth reflects "weaker gains in new businesses and a decline in employment for the first time in eight months," said Aashna Dodhia, economist at IHS Market.

On the other hand, Dodhia said the "impact of US tariffs on steel and aluminium on India is expected to be limited" as India's exports of both metals to the U.S. "accounted for less than 0.4 percent of total merchandise exports."

Other Key Highlights:

• Pre-production inventories rose in March following a decline in February.
• Growth was reported across all three broad market groups, led by consumption goods.
• There was some pressure on supply chains as average lead times continued to lengthen during March (the third month in a row).
• IHS Markit marginally downgraded its real GDP forecast to 7.3 percent for financial year 2018.

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