The FINANCIAL — A gauge of manufacturing activity in India rose to the highest in four months in May, as new orders increased on the back of stronger domestic and overseas demand, according to Nasdaq.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index, prepared by Markit, rose to 52.6 in May from 51.3 a month earlier, data released Monday showed. It marked the 19th straight month of the reading holding above the 50 mark, which separates expansion and contraction.
“PMI data signalled a further robust expansion of the Indian manufacturing economy in May,” Pollyanna De Lima, an economist at Markit, said.
Output growth as well as growth in new orders accelerated to a four-month high, although the rise in export orders lost traction, she added.
HSBC said order growth was broad-based, with consumer goods producers reporting the sharpest increase.
The findings come close on the heels of India’s gross domestic product data announced Friday that showed manufacturing output grew a robust 8.4% in the three months ended March 31.
The findings of the HSBC survey could help add to optimism that the sector is recovering and brighten the outlook for the South Asian economy.
Still, there were some worrying signs.
HSBC said manufacturers kept employment levels broadly unchanged in May as there was still uncertainty about the sustainability of growth.
Input costs also rose, even though the increases were weaker than the average for the series, it added. “This indicates that further rate cuts [by the Reserve Bank of India] are still on the horizon,” Ms. De Lima said.
The RBI is widely expected to cut its main policy rate by a quarter-percentage-point on Tuesday as inflation has cooled, providing it room to ease borrowing costs to stimulate lending and growth.
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