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India manufacturing slows in January
February 2, 2015, 8:42 am

In January, India's manufacturing activities expanded at a three-month-low pace, as orders moderated, said an HSBC report [Image: Archives]

In January, India’s manufacturing activities expanded at a three-month-low pace,
as orders moderated, said an HSBC report [Image: Archives]

India’s manufacturing sector activity in January fell from December as new orders both from domestic and international sources grew at a slower pace, an HSBC survey said on Monday.

The headline HSBC India Purchasing Managers’ Index (PMI) — a composite gauge designed to give a single-figure snapshot of manufacturing business conditions — fell from December’s two-year record of 54.5 to 52.9 in January.

A figure above 50 indicates expansion, while a figure below that level means contraction.

“Manufacturing activity continued to signal improvement in January, though the rate of growth slipped to a three month low,” HSBC Chief India Economist Pranjul Bhandari said, adding that the “slip can partly be attributed to consolidation after two months of impressive upticks.”

Latest data signalled sustained growth of manufacturing activity at the start of 2015, with output and new orders rising simultaneously for the fifteenth consecutive month.

“New orders, both from domestic and international sources, also continued to grow, though at a slower pace than in December. New orders were strongest in the consumer goods sector,” Bhandari said.

Meanwhile, growth of output and new business continued to have little impact on employment in January, as workforce numbers rose only marginally during the month.

“On the inflation front, growth in input and output prices moderated further due to cheaper commodity prices. Sluggish growth and falling inflation further reinforces our view that the RBI should deliver upfront rate cuts. We expect the repo rate to be lowered by 75 bps in the first half of 2015,” Bhandari said.

The Central Bank of India, which last month announced a surprise rate cut of 25 basis points after maintaining a hawkish monetary stance for 20 months, is scheduled to undertake its sixth bi-monthly monetary policy review, 2014-15 on Tuesday, February 3.

While retail inflation slipped to 5 per cent in December, the Wholesale Price Index (WPI) inflation remained near zero level (0.1 per cent).

Since the glitzy campaign “Make in India” launch in September of last year, Modi has invited global firms to set up their manufacturing bases in the country.

 

Source: Agencies