Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Industry / Manufacturing/  Factory activity growth slows to five-month low in February
BackBack

Factory activity growth slows to five-month low in February

PMI falls for the second consecutive month from 52.9 in January to 51.2 in February as new orders slow

A slowdown in new orders dragged on overall output, the HSBC survey showed on Monday. Photo: Priyanka Parashar/Mint (Priyanka Parashar/Mint)Premium
A slowdown in new orders dragged on overall output, the HSBC survey showed on Monday. Photo: Priyanka Parashar/Mint
(Priyanka Parashar/Mint)

Indian manufacturing activity expanded at its slowest pace in five months in February as a slowdown in new orders dragged on overall output, a business survey showed on Monday.

The HSBC Manufacturing Purchasing Managers’ Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January. A reading above 50 separates growth from contraction.

“Manufacturing growth in India lost momentum in February, with output and new orders expanding at softer rates than those seen in the past four months," said Pollyanna De Lima, economist at Markit.

The new orders sub-index fell to 51.9, the lowest level in five months, from January’s 54.4. The drop underscored softer domestic demand, which also accounted for a slight cut in headcount at firms. The seasonally-adjusted output index also fell to its lowest since September.

“On a positive note, foreign orders rose at a strong and accelerated pace, while the PMI remained in positive territory. These factors brighten the prospects for a rebound in output and employment in coming months," De Lima said.

Indeed, February marks the 16th straight month of factory activity expansion. And if India can grow as strongly in the coming fiscal year as the government said in its newly-released budget —expanding by up to 8.5%—that should boost manufacturing.

Output prices, or the inflation on goods for consumers, rose at the weakest rate in five months as manufacturers offered discounts to secure new business, according to a press statement released by Markit.

However, activity in China’s factory sector edged up to a seven-month high in February but export orders shrank and deflationary pressures persisted, a private business survey showed, adding to the view that yet more interest rate cuts will be needed.

Chinese policymakers are embarking on their biggest easing campaign since the depths of the global crisis as the world’s second-largest economy is weighed down by a cooling property market, high debt levels and excess factory capacity.

The People’s Bank of China cut interest rates on Saturday, in the latest effort to support the economy as its momentum slows. The move was its third major policy easing since late November and came just days before the annual meeting of the country’s parliament.

PMI climbed to 50.7 in February—the strongest level since July—from 49.7 in January, as overall new orders picked up.

In another part of the world, euro zone manufacturing growth steadied in February to match January’s six-month high, helped by a weaker euro that boosted export orders and a faster pace of hiring, a business survey showed on Monday.

But the latest euro zone manufacturing PMI still pointed to only a modest pace of growth across factories in the region.

“The euro zone manufacturing sector barely expanded in February, highlighting the malaise that still hangs over the region’s goods-producing economy as a whole," said Chris Williamson, chief economist at Markit. “However, beneath the disappointing headline figure, different parts of the manufacturing economy are clearly moving at very different speeds, ranging from an (Irish) boom to a (French) slump."

After factory gate prices fell in January at the steepest rate since mid-2013, the pace of decline eased last month, which could hearten European Central Bank policymakers who are keen to reverse a bout of falling prices.

But a separate Reuters poll conducted this week showed just half of economists expect the ECB’s money printing stimulus, which starts this month, to push consumer price inflation closer to its target of just under 2%. Reuters

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 02 Mar 2015, 10:41 AM IST
Next Story footLogo
Recommended For You
Manufacturing Stocks
₹557.550.52%
ITC
₹4280.13%
₹2,987.85-0.37%
₹152.852%
Switch to the Mint app for fast and personalized news - Get App