Manufacturing activity moderated in March, failing to deliver on expectation that things were looking up after February numbers promised a recovery.
The HSBC Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 51.3 in the past month from a 12-month high of 52.5 in February, hurt by a slowdown in order flows and raw material shortages.
The 50-point mark separates growth from contraction in this index based on a survey of 500 large manufacturing units.
The weaker PMI reading comes a day after commerce and industry ministry data showed the infrastructure sector expanded 4.5% in February, its fastest pace in five months — providing mixed evidence on the Indian economy that was projected to grow at a tepid pace of 4.9% in the just-ended fiscal year.
The government’s Central Statistics Office estimates the manufacturing sector to have shrunk 0.2% in 2013-14.
The decline in the index was largely due to slower inflow of new orders. The sub-index of PMI, which measures new orders, dropped to 52.7 in March from 54.9 in the previous month despite foreign order inflows rising to their strongest since April 2011.
This suggests the slowdown was domestically driven. Higher inflows of orders from outside could help push exports that contracted 0.7% in February after eight months of expansion. The survey showed inflationary pressures eased in March. Input costs rose at the weakest rate in nine months while output prices increased at the slowest pace since June.
The RBI on Tuesday left interest rates unchanged despite a moderation in inflation in recent months.
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