India's manufacturing growth in May slowed to a three-month low as heatwave prompted companies to scale back their working hours
India's manufacturing growth witnessed a slowdown last month, dropping to its lowest point in three months owing to heatwave. The higher-than-usual temperature prompted companies to scale back their working hours. However, the overall factory activity remained strong according to data from S&P Global.
While it is common for the country to experience extreme weather especially during May month, the temperature rose above 50 degrees Celsius in some regions this time. The HSBC final India Manufacturing Purchasing Managers' Index, compiled by S&P Global, fell to 57.5 in May from April's 58.8, slightly below the initial estimate of 58.4.
“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panelists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes,” said Maitreyi Das, Global Economist at HSBC.
While the output and new order PMI sub-indexes decreased to their lowest levels in three months, they still remained robust owing to strong demand and favorable economic conditions. Growth was somewhat restrained by disruptions related to elections. However, international sales surged at their highest rate in over 13 years.
“The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output. Panellists cited heatwaves as a reason for lower work hours in May, which may have affected production volumes. In contrast, new export orders rose at the fastest pace in over 13 years, with a broad-based demand across geography,” Das added.
Meanwhile, India's GDP for the fourth quarter of FY24 stood at 7.8 per cent, largely fueled by strong activity in the manufacturing sector. On yearly basis, the economy grew by 8.2 per cent for the entire FY24.