India's Manufacturing PMI at 50.5 indicates slow paced growth

Manufacturing output , as measured by the PMI index , has shown a down tick in growth rate after posting a eight month high number at 52.4 for the month of March. 

The Nikkie India Manufacturing PMI (Purchasing Manager's Index) measures the manufacturing sector's performance based on survey of 500 manufacturing companies in India.  Following aspects influence the PMI index  viz.,  new orders , output , employment , supplier's delivery times  and stock of items purchased. A reading above 50 is indicative of an expansion in manufacturing sector compared to the previous month. A reading below 50 indicates contraction; while a reading of 50 indicates no change. 

A reading of 50.5 is the lowest since January 2016 ,indicating a slow paced growth in Manufacturing sector.The PMI index was at 51 for the month of January; 51 for the month of February ; 52.4 for the month of March; and finally 50.5 for the month of April.The average PMI in India for the period 2012 uptil 2016 has been at 51.90. The manufacturing PMI for April at 50.5 is below the average for the period discussed (2012-2016), which stands at 51.90, further indicating the drag in the sector. During these four years i.e. 2012 to 2016 the manufacturing PMI has touched a high of 55 in June 2012; and on the down side, the bottom it touched was at 48.50 in August 2013.

However the reading has been above 50 for the PMI for last 4 months, highlighting the growth in the manufacturing sector. The Manufacturing Index PMI contracted in the month of December 2015 by reaching the levels of 49.1 points. The growth, albeit slow at a six month low, can be attributed to the sustainability of the new export business according to the report filed by Markit. The manufacturing employment index for the month of April remained unchanged just like it did for the past 2 years.  Month of April also saw the input cost inflation accelerating as the prices stiffened for  metals, chemicals, plastics and paper.