Setback For Govt As Manufacturing Output Slips To 22-Month Low In October

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New Delhi: Government which has been working to improve Manufacturing sector has to face a set with the PMI reading for October month. In a survey by Nikkei, PMI reading for Indian Manufacturing sector for October month came in at  50.7 which is the lowest in last 22 months. The heavy downfall in new purchase orders and new hiring made by these companies instead of this downfall are said as the reasons for this.

The Nikkei India Manufacturing Purchasing Managers’ Index, or PMI touched 50.7 in October but it was 51.2 in September. This reduction in PMI indicates that the reinforcement initiatives by government are weak in every sector. The PMI above 50 is indicative to economic expansion.

Low Volume of New Purchase Orders

“The PMI reading for October reflects that the growth in manufacturing sector across the country has been slow”, said, Pauliana de Lima from Market Economist and Report. New purchase orders put to companies have been also slow and also manufacturing outputs were also in low volume.

New hiring were done by these companies instead of low volume of purchase orders. Hence for the first time employment index went up although it was very less.

Miserable Economic Condition

Lima also said, “The overall economic condition in October is miserable and because of this companies preferred hiring extra employees. And for these two reasons the inventory of ready products has come down.” Although Lima also quoted that production growth is expected to improve in coming months.

Risk of high Inflation again

It has been quoted on reports on pricing that in October the effect of high inflation was noticed on manufacturing sector. Metal, paper and food products are reported to have excess production which has reduced average investments in buying. Although, this increment is not very impressive as indicated in survey. Companies have increased prices to deal with pressure of extra production cost.

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