Mumbai: Indian manufacturing activity grew at its slowest pace in four months in January, easing from a 33-month high in December in a sign the effect of tighter monetary policy is feeding into the broad economy, a survey showed on Friday.
The survey results come three days after India’s central bank kept key interest rates steady at the time when many in the market had expected it would cut following the US Federal Reserve’s decision to slash rates the previous week.
ABN Amro Bank purchasing managers’ index (PMI) eased to a seasonally adjusted 60.7 in January, its lowest reading since September, from 61.9 in December, which was the highest reading since the survey began in April 2005. This marks the fourth consecutive month the survey has been above 60.
A reading above 50 signals expansion while readings below 50 suggest contraction.
The PMI, compiled by UK-based NTC research and sponsored by the Dutch bank, tracks changes in manufacturing business conditions by polling 500 companies each month on output, new orders, employment and prices.
Industrial output has slowed in recent months due to sluggishness in consumer demand and exports, with latest data showing output rose in November by annual 5.3%, sharply down from an upwardly revised 12% in October.
The output index slowed to a four-month low of 63.7 in January from 65.3 in December, and the index of the quantity of purchases made by firms fell to 66.4 from 69.7 in January.
New orders slowed, with the index falling to 70.0 from 72.1 in December. Export order growth also slowed with the index easing to 56.3 in January from 57.6 in December.
Slowing industrial activity has had a calming effect on inflationary pressures.The output price index fell to a five-month low of 52.9 in January from 53.7 the previous month, while the input price index eased to a six-month low of 53.3 from 54.2 in December.
But hiring picked up with the employment index registering its fastest increase for 25 months at 52.5 in January, up from 52.2 in December.