Latest survey data signalled a further, albeit weaker, improvement in Indian manufacturing conditions. This was reflected by weaker expansions in output and new orders and employment. Inflationary pressures intensified with both input and output prices rising at the fastest pace since February. Looking ahead, business optimism was weak by historical standards. The Nikkei India Manufacturing Purchasing Managers' Index® (PMI®) fell from 51.6 in April to 51.2 in May. The latest upturn signalled a marginal improvement in the health of the manufacturing sector. Overall, the respective index registered above the neutral 50.0 threshold for the tenth consecutive month. Manufacturing output rose in May, thereby marking a 10-month sequence of expansion. Where an increase was reported, panellists commented on an improvement in demand conditions. However, the rate of increase slowed to a modest pace. Greater production in consumption and intermediate groups continued to outweigh a decline in investment goods. In line with the trend for output, new orders placed at Indian manufacturing companies rose in May. Panellists suggested that enhanced marketing initiatives supported new client wins. As was the case with output, the latest upturn was modest. Meanwhile, amid reports of greater demand from international markets, Indian manufacturers reported the strongest gain in new export orders since February.

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