India’s manufacturing activity remained steady in October but a pick up in new orders offered hope of a revival in coming months, according to a private sector survey of purchasing managers.
The seasonally adjusted HSBC India Manufacturing PMI rose to 52.9 in October from 52.8 in the preceding two months, signalling an improvement in the manufacturing sector and giving the economy another reason to cheer. A reading of 50 separates growth from contraction.
The index, compiled by Markit, is based on questionnaires sent to purchasing executives in over 500 manufacturing companies and is designed to measure the overall health of the sector. This is in line with the trend of revival in production ahead of Diwali when factory output traditionally increases. The latest reading of the index of industrial production as well as the data on core infrastructure have both indicated at the economy getting healthier. While the IIP expanded 2.7% in August after two months of contraction, government data showed that output at eight core industries grew to a seven month high of 5.1% in September. The survey, however, said that the manufacturing sector would have performed better if persistent power shortages had not weighed on production
Although sceptical of the IIP data, most analysts expect a turnaround in industrial output in the coming months.
The survey said new export business growth was led by a stronger international demand, launch of new products and favourable exchange rate conditions.
However, export numbers do not corroborate the rise in orders. Exports declined for the fifth month in a row in September by 10.78%.
Rate of inflation eased to its slowest pace since November 2010. While input and output prices remained above the 50 mark, both eased significantly to a near two-year low.
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