India's Manufacturing Sector Growth Weakens In May


Markit's Purchasing Managers' Index (PMI) for manufacturing, which accounts for about 10 percent of the economy, rose to 49.6 from 48.2 in April.

Like the disappointing headline PMI figure, the internal components within the IHS Markit survey were also disappointing.

May has highlighted the record number of people in work in her campaign, and Thursday's figures showed that manufacturers planned to hire staff at the fastest pace in almost three years. The rate of expansion was the highest in 16 months which has prompted many companies to prepare for higher orders in the coming months.

Survey respondents reported that the weak exchange rate had led to intense negotiations with suppliers, but some noted that the peak phase of price hikes for imported materials had now passed.

The sub-indexes of input costs and output prices shrank for the first time since June 2016 and February 2016 respectively, Zhong added.

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This PMI measures changes in activity levels across China's manufacturing sector from one month to the next.

Investec Ireland's chief economist Philip O'Sullivan said the economy appeared to be enjoying the benefit of an improving worldwide backdrop, with his bank forecasting the world economy will grow 3.9% next year, its highest growth rate since 2011.

"House building was the key growth driver, with work on residential projects rising at the fastest pace since December 2015", said Tim Moore, senior economist at IHS Markit.

"Growth of new export business played a lesser role in comparison, with the trend in foreign demand continuing to improve only in fits and starts, despite the existence of an historically weak sterling exchange rate".

Separately, Spanish manufacturing grew at its fastest pace since January, boosted by strong output and new orders, and job creation surged at its fastest pace in 19 years. Meanwhile, muted inflationary pressure may prompt the Reserve Bank to adopt an accommodative policy stance, the survey said.