Manufacturing sector activities at a 9-month low, pressure from rising inflation

Inflation affects the manufacturing sector

According to PMI data, orders and production from factories increased for the 12th consecutive month in June, although the rate of expansion in both cases has reached a nine-month low.

Manufacturing Sector in India during the month of June (manufacturing sector) has reached a 9-month low. Although it has been growing continuously for 12 months, only the pace of growth has slowed down. This information was released today ie Purchasing Manager Index of the sector. PMI , PMI) has been obtained from. If the experts are to be believed, the rising inflation due to geo-political tensions (inflationThere are many reasons like weakness in rupee which are putting pressure on the economy. Due to this there has been a decrease in PMI. However, with the release of the PMI data, S&P also said that in a challenging environment, the growth in manufacturing sector activity is very encouraging, even if it has seen a slight slowdown.

Where did PMI reach?

The Purchasing Managers’ Index, or PMI, for the S&P Global India manufacturing sector fell to 53.9 in June, from 54.6 in May. June’s PMI figures have been above 50 for the 12th consecutive month. Which points to an improvement in the overall operating conditions for the sector. A PMI above 50 indicates expansion, while a score below 50 indicates a decline. Poliana De Lima, Assistant Director (Economics) at S&P Global Market Intelligence, said the first quarter of 2022-23 has been a good one for India’s manufacturing industry, with rising price pressures, high interest rates, rupee depreciation and challenging geopolitical scenario. Despite this, there was a militancy in the area which is encouraging. Orders and production from factories increased for the 12th consecutive month in June, although the rate of expansion in both cases reached a nine-month low. The fundamental reason behind the increase is strong orders.

Rising inflation spoiled sentiments

According to the survey, inflation concerns are continuing to dominate business confidence and sentiments have reached a 27-month low. However, on the jobs front, employment has grown for the fourth consecutive month. At present, the inflation rate in the country remains above the limit set by the Reserve Bank. Due to which the central bank has to take a decision to increase the rates. Due to this there is a possibility of slowing growth. At the same time, rising inflation has put pressure on the margins of companies, forcing them to increase prices. Traders fear that the increase in prices may adversely affect the demand.