Mumbai: Growth in India’s manufacturing activity held steady in July amid robust local demand and a slight rebound in exports, but intense competition curbed companies’ pricing power even as raw material costs jumped, a survey showed.
The Markit Purchasing Managers’ Index (PMI), based on a survey of 500 companies, was at 55.30 in July, little changed from 55.34 in June.
It has been above the threshold of 50 -- which separates expansion from contraction -- for four straight months. Before that, it shrank for five months through end-March, hitting a trough of 44.37 in December.
“The domestic market remained the primary impetus to growth, although the export market also played a part as its recovery gained pace,” said Gemma Wallace, an economist at Markit Economics. The new orders index rose to 59.75, its highest in nine months, from 58.56 in June.
Wallace also said there was evidence that capacity pressures have started building up.
Manufacturing output, which makes up about 15% of India’s gross domestic product, rose an annual 2.5% in May, higher than April’s 0.4% increase.
In its review of the monetary policy, published last week, the Reserve Bank of India (RBI) said it expects the economy to grow 6% in the 2009-10 fiscal year ending in March, with an upward bias.
Last year, it expanded by 6.7%, the slowest in six years, and much lower than growth rates of 9% or more in the previous three fiscal years, as the global financial crisis hit.
The RBI kept its key short-term rates and cash reserve requirement unchanged at the review.