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Positive sentiment continues for mfg sector in Q4: FICCI survey

Monday, May 13, 2019

Sentiment in the manufacturing sector remains positive as overall capacity utilisation rose to 80 per cent in the fourth quarter, a survey by FICCI said.

According to FICCI's 'Quarterly Survey on Manufacturing', the overall sentiment in the manufacturing sector remains positive as the proportion of respondents reporting higher output growth (around 54 per cent) during the January-March 2018-19 remained the same as compared to the third quarter.

"First time in last many quarters, the overall capacity utilisation in manufacturing has witnessed an increase to 80 per cent in Q4 2018-19. It was hovering at 75 per cent for last many quarters," it added.

On hiring front, the outlook for the sector seems to have slightly improved for near future. "While in Q4 of 2017-18, 70 per cent respondents mentioned that they were not likely to hire additional workforce, this percentage has come down to 62.5 per cent for Q4 of 2018-19," the survey pointed out.

In terms of order books, 44 per cent respondents in March 2019 quarter said they expect the number to go up as against 43 per cent in October-December 2018 quarter.

Going forward, it is expected that hiring scenario will improve further as 37.5 per cent respondents in Q4 2018-19 are looking at hiring more people now as compared to 30 per cent in the year-ago period.

FICCI's survey assessed manufacturers in 12 major sectors namely automotive, capital goods, cement and ceramics, chemicals, textiles, leather and footwear, metal and metal products, fertilisers and pharmaceuticals, and others.

Responses were drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3.56 lakh crore.

About 72 per cent respondents said the cost of production as a percentage of sales has risen - primarily on account of increased cost of raw materials, wages, power cost, rising crude oil prices, increase in finance cost and rupee depreciation.

About 40 per cent respondents reported plans for capacity additions for the next six months as compared to 47 per cent in the third quarter.

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