Manufacturing in January

India’s manufacturing sector expanded at its fastest pace in eight months in January on the back of a sharp increase in new orders, a survey showed on Wednesday. The seasonally-adjusted HSBC Purchasing Managers’ Index (PMI) — a headline index designed to measure the overall health of the manufacturing sector — registered 57.5 in January, up from 54.2 in December. The latest reading pointed to the strongest improvement in business conditions since May 2011, the survey showed. The 50-point mark separates growth from contraction. The PMI survey found the rate of expansion accelerated for second month running. Overall improvement in demand and market conditions had led to the rise in new order volumes.Growth of new export business also accelerated in the latest survey period, but to a lesser extent. Anecdotal evidence suggested that difficult economic conditions and increased competition in some markets had limited gains in new export orders, the survey said. “Activity in the manufacturing sector rebounded again in January led by higher demand from both domestic and foreign clients, suggesting some recovery in sentiment in recent months,” said Leif Eskesen, chief economist for India and Asean at HSBC. The survey showed input prices faced by Indian manufacturers increased substantially in January. Higher raw material costs were cited as the main driver of input price inflation. The rate of increase was slightly faster than in December. Subsequently, manufacturers raised their output prices again. “These numbers suggest it’s premature for the RBI to cut policy rates and that they have to await evidence of a significant and sustained decline in inflation,” Eskesen said.