BENGALURU, May 3 (Reuters) - India's factory activity accelerated slightly in April as strict restrictions to curb the devastating second-wave of COVID-19 infections dampened domestic demand, while prices surged at their sharpest pace in about seven years, according to a survey.
The rapidly spreading virus has infected over 300,000 people daily recently and resulted in a record number of deaths in the country, leading major provinces to reimpose strict restrictions that have curbed some business activity. the Nikkei Manufacturing Purchasing Managers' Index INPMI=ECI , compiled by IHS Markit, edged up to 55.5 in April from March's seven-month low of 55.4, remaining above the 50-level separating growth from contraction for a ninth straight month.
Despite foreign demand expanding at its quickest pace in six months, a sub-index tracking overall demand declined to its lowest since August, indicating domestic demand suffered from the health crisis that has left hospitals and morgues overwhelmed.
Output also hit an eight-month low in April, though the pace of expansion remained solid.
"The PMI results for April showed a further slowdown in rates of growth for new orders and output, both of which eased to eight-month lows amid the intensification of the COVID-19 crisis," noted Pollyanna De Lima, economics associate director at IHS Markit.
"Still, the increases were strong by historical standards and the survey revealed other positive news. The headwinds facing manufacturers cannot be ignored, however."
Asia's third-largest economy was predicted to grow at a slower pace this fiscal year than previously thought due to the strong surge in coronavirus cases and a delay in vaccinations, a Reuters poll showed last week. ECILT/IN
Firms cut jobs again last month, extending the year-long spree, but the rate of layoffs was the slowest since March 2020. Optimism about the year ahead also improved slightly.
Meanwhile, input costs surged at their strongest pace in nearly seven years, forcing firms to raise prices for their goods at the sharpest rate since October 2013, signaling overall inflation might remain elevated. surge in COVID-19 cases could dampen demand further when firms' financials are already susceptible to the hurdle of rising global prices," added De Lima.
"Data for the coming months will be important at verifying whether client demand is resilient to these challenges or if producers will have to further absorb cost burdens themselves to secure new work."
However, that is unlikely to lead the Reserve Bank of India to tighten monetary policy anytime soon as the central bank is widely expected to hold to its promise of supporting economic growth.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.