Factories across India continued to report improving operating conditions in April: Survey
Updated: May 02, 2014 03:45:09pm
New Delhi, May 2 (KNN) Factories across India continued to report improving operating conditions in April, said an HSBC survey today, which added that India's manufacturing sector growth remained steady in April as a slowdown in export orders was countered by firmer domestic demand during the month.
The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, stood at 51.3 in April, unchanged from 51.3 in March, amid moderate expansion of incoming new business orders.
Activity in the sector expanded for the sixth consecutive month in March. A PMI reading above 50 indicates growth while a lower reading means contraction.
Manufacturing production rose for the sixth successive month in April, amid reports of improved new business inflows. Nonetheless, growth of output waned on the back of competitive pressures and power outages.
Sector data highlighted higher production in two of the three monitored categories, namely consumer and intermediate goods.
“Amid reports of stronger demand, new orders received by Indian manufacturers grew further in April. That said, the overall pace of expansion eased slightly since March, as increased competition for new work and the elections reportedly hampered growth. Incoming new business rose at consumer and intermediate goods producers, while a reduction was noted in the investment goods sub-sector,” said HSBC.
Average purchase costs increased in April, amid evidence of higher prices paid for metals, chemicals, plastics, paper, textiles and energy. However, the rate of cost inflation softened to the slowest since last May.
Additional cost burdens were partly passed on, as tariffs rose further. Nevertheless, the rate of charge inflation was only marginal and the joint-weakest in the current eleven-month inflationary sequence, HSBC added.
"The momentum in the manufacturing sector held broadly steady, with domestic demand countering a slowdown in export orders," HSBC Chief Economist for India and ASEAN Leif Eskesen said.
Eskesen further said: "A build-up in finished goods inventories could weigh on output growth in coming months in the absence of a pick-up in demand."
During April, the momentum in manufacturing held broadly steady, but growth remains subdued.
"Output is held back by lack of power capacity and soft demand, with external demand easing recently and, anecdotally, due to a decline in orders for investment goods.
"While we may get more traction on economic reform and implementation of investment projects post elections, it will still take a while before we see a notable and more sustained lift to activity," HSBC said.
Though there were signs of easing inflation pressures in the manufacturing cluster, consumer price inflation remains elevated.
"Encouragingly, inflation pressures eased, but that does not mean that the RBI can take down its inflation guards," Eskesen said.
Moreover, the El Nino is expected to lead to below-normal precipitation, which could lift food inflation over the summer and into the fall. The RBI will, therefore, not have much to cheer about and will need to maintain a hawkish stance, HSBC added. (KNN/SD)
The HSBC India Manufacturing Purchasing Managers' Index (PMI), a measure of factory production, stood at 51.3 in April, unchanged from 51.3 in March, amid moderate expansion of incoming new business orders.
Activity in the sector expanded for the sixth consecutive month in March. A PMI reading above 50 indicates growth while a lower reading means contraction.
Manufacturing production rose for the sixth successive month in April, amid reports of improved new business inflows. Nonetheless, growth of output waned on the back of competitive pressures and power outages.
Sector data highlighted higher production in two of the three monitored categories, namely consumer and intermediate goods.
“Amid reports of stronger demand, new orders received by Indian manufacturers grew further in April. That said, the overall pace of expansion eased slightly since March, as increased competition for new work and the elections reportedly hampered growth. Incoming new business rose at consumer and intermediate goods producers, while a reduction was noted in the investment goods sub-sector,” said HSBC.
Average purchase costs increased in April, amid evidence of higher prices paid for metals, chemicals, plastics, paper, textiles and energy. However, the rate of cost inflation softened to the slowest since last May.
Additional cost burdens were partly passed on, as tariffs rose further. Nevertheless, the rate of charge inflation was only marginal and the joint-weakest in the current eleven-month inflationary sequence, HSBC added.
"The momentum in the manufacturing sector held broadly steady, with domestic demand countering a slowdown in export orders," HSBC Chief Economist for India and ASEAN Leif Eskesen said.
Eskesen further said: "A build-up in finished goods inventories could weigh on output growth in coming months in the absence of a pick-up in demand."
During April, the momentum in manufacturing held broadly steady, but growth remains subdued.
"Output is held back by lack of power capacity and soft demand, with external demand easing recently and, anecdotally, due to a decline in orders for investment goods.
"While we may get more traction on economic reform and implementation of investment projects post elections, it will still take a while before we see a notable and more sustained lift to activity," HSBC said.
Though there were signs of easing inflation pressures in the manufacturing cluster, consumer price inflation remains elevated.
"Encouragingly, inflation pressures eased, but that does not mean that the RBI can take down its inflation guards," Eskesen said.
Moreover, the El Nino is expected to lead to below-normal precipitation, which could lift food inflation over the summer and into the fall. The RBI will, therefore, not have much to cheer about and will need to maintain a hawkish stance, HSBC added. (KNN/SD)
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