3.2.15

HSBC PMI: January 2015


Factory activity slowed marginally in January , while core sector growth moderated to a three-month low, posing some fresh concerns about the strength of the industrial recovery .
The HSBC India Purchasing Manager's Index, a key indicator to gauge manufacturing operating conditions, slowed to 52.9 in January from two-year high of 54.5 in December. The 50-point mark separates contraction from expansion.
Amid reports of improving demand, latest data indicated that new orders increased for the fifteenth successive month in January , albeit at a slower rate compared to December. The December survey results had sparked hopes of a sharp turnaround in the sector.
Separate data showed the eight core sectors spanning coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and cement slowed to 2.4% in December compared to the 4% expansion in the same period previous year and slower 6.7% posted in November. The expansion in the April-December period was estimated at 4.4% compared to a growth of 4.1% in the year earlier period.
Decline in crude oil, natural gas, fertilizers and steel sectors hurt expansion, while a slowdown in the electricity segment output hurt the overall number. The core sector accounts for 38% of the index of industrial production and the moderation could impact the industrial output numbers, which are expected to be released later in the month.
Economists expressed surprise over the core sector data outcome for December. They said the data was based on the old base year of 2004-05, which is surprising, considering that GDP numbers to be used from January 30 onwards would be based on 2011-12 base year.

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