India's factory output at 17 month high; employment deteriorated fractionally
Updated: Aug 01, 2014 02:13:02pm
New Delhi, Aug 1 (KNN) India’s factory output has reached a 17-month peak of 53.0 in July, up from 51.5 in June following new orders by increasing output even as input prices jumped sharply, according to a survey. However, employment deteriorated fractionally, while inflationary pressures continued to emerge, particularly on the supply-side.
The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 53.0 in July from 51.5 in June, its highest since February 2013.
“The reading signalled a solid improvement in business conditions,” the survey said.
A reading above 50 separates growth from contraction.
While the PMI has signalled an expanding manufacturing sector for nine months, a surge in new orders in July helped drive the solid improvement in business conditions.
“Workforce numbers were reduced for the first time since September 2013 in July. However, the rate of job shedding was marginal. Nonetheless, declines in employment were seen by producers of consumer and intermediate goods, with only investment goods firms reporting job creation,” the report said.
Input prices rose at their fastest pace since February, indicating inflation may remain elevated in coming months as companies seek to pass on the higher costs although that is not something they did to a large extent last month.
“Higher prices paid for metals, plastics, textiles, packaging, food and energy led to a further marked increase in input prices in July. The rate of cost inflation was the quickest since February. Rising costs were only partially evident in July’s increase in output prices, as the rate of charge inflation was slight overall and muted in comparison with historical data,” the report said.
"Finally, the manufacturing sector is starting to pick up steam. A flood of new orders from both domestic and external sources has led to a surge in activity, pushing the manufacturing PMI to a 17-month high,” said Co-Head of Asian Economic Research at HSBC, Frederic Neumann while commenting on the India Manufacturing PMI survey.
“Details within the survey show that all monitored categories witnessed a rise in output and order flows. A quick word of caution, however. The speed of the recovery has also lifted price pressures, with input prices rising steeply. This means that the RBI may not cheer as loudly as the rest of us,” he added. (KNN/SD)
The HSBC Manufacturing Purchasing Managers' Index (PMI), compiled by Markit, rose to 53.0 in July from 51.5 in June, its highest since February 2013.
“The reading signalled a solid improvement in business conditions,” the survey said.
A reading above 50 separates growth from contraction.
While the PMI has signalled an expanding manufacturing sector for nine months, a surge in new orders in July helped drive the solid improvement in business conditions.
“Workforce numbers were reduced for the first time since September 2013 in July. However, the rate of job shedding was marginal. Nonetheless, declines in employment were seen by producers of consumer and intermediate goods, with only investment goods firms reporting job creation,” the report said.
Input prices rose at their fastest pace since February, indicating inflation may remain elevated in coming months as companies seek to pass on the higher costs although that is not something they did to a large extent last month.
“Higher prices paid for metals, plastics, textiles, packaging, food and energy led to a further marked increase in input prices in July. The rate of cost inflation was the quickest since February. Rising costs were only partially evident in July’s increase in output prices, as the rate of charge inflation was slight overall and muted in comparison with historical data,” the report said.
"Finally, the manufacturing sector is starting to pick up steam. A flood of new orders from both domestic and external sources has led to a surge in activity, pushing the manufacturing PMI to a 17-month high,” said Co-Head of Asian Economic Research at HSBC, Frederic Neumann while commenting on the India Manufacturing PMI survey.
“Details within the survey show that all monitored categories witnessed a rise in output and order flows. A quick word of caution, however. The speed of the recovery has also lifted price pressures, with input prices rising steeply. This means that the RBI may not cheer as loudly as the rest of us,” he added. (KNN/SD)
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