Manufacturing activity gathered pace in November after four months of contraction on the back of increased domestic orders, signalling a tentative turnaround in the key sector.
Manufacturing operating conditions across India improved in November, with a return to growth of new orders, leading companies to raise their production levels for the first time since April.
Purchasing activity also rose in November and job creation was sustained, the survey showed.
Finance minister P Chidambaram said the PMI data was a good sign and augured well for the manufacturing sector. The industrial sector has been hit hard by an economic slowdown and stubborn inflation and high interest rates. Policy and regulatory delays have also acted as bottlenecks.
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) climbed from 49.6 in the previous month to 51.3 in November. This was the first reading above 50.0 recorded since July, the survey showed. “Manufacturing production rose for the first time in seven months during November, albeit moderately,” the survey said.
It said strengthening of demand resulted in new order growth and, although modest, the rise in new orders ended a five-month period of contraction. Export business increased at a marginal and slower rate, suggesting that the domestic market was the main source of new order gains.
Economists said the November PMI data pointed to a recovery and supported the view that growth could gather pace in the second half of the financial year.