Manufacturing set to improve as order books get stronger, says FICCI survey

Indian factories have started humming again with order books getting stronger. However, a manufacturing turnaround is still some time away - capacity addition, exports and even hiring will remain muted in the September quarter, a survey from industry body FICCI said on Monday.

The quarterly survey, which measures the "expectations of manufacturers", polled 14 manufacturing sectors and 392 manufacturing units. It indicated that 11 of 14 sectors are likely to show improvement in production during the second quarter ending September 30.

About 43 per cent respondents reported higher order books for the September quarter versus 36 per cent in the previous quarter. Leather, electronics, fast-moving consumer goods and food products, and ceramics are poised to grow over 10 per cent during the period.

Capital goods, machine tools, tyre, chemicals, textile and textile machinery, are expected to grow less than 10 per cent while automotive, cement, steel and metals will continue the poor run, growing less than five per cent, the survey said.

A majority from the automotive sector (60 per cent) expect production to either fall or remain stagnant in the September quarter versus the year-ago period.

An encouraging fact is shrinking inventory levels. Around 20 per cent of the survey's respondents reported that they are carrying more than their average levels of inventories. It was 29 per cent in the June quarter and 26 per cent in the year-ago period.

Nevertheless, most manufacturing units (71 per cent) don't have plans for capacity addition for the next six months with capacity utilisation remaining stagnant thus far. Over 64 per cent said they may not hire additional workforce in next three months.