Mumbai: Indian manufacturing activity expanded at its slowest pace in five months in August as companies struggled to raise selling prices despite higher costs, a survey showed on Tuesday.
The HSBC Markit Purchasing Managers’ Index (PMI), based on a survey of 500 companies, fell to a five-month low of 53.2 in August from July’s revised reading of 55.4.
The index has been above 50, which separates expansion from contraction, for five months. Before that, it shrank for the five months through March, hitting a trough of 44.4 in December.
“In our view, this is more likely to represent a pause for breath than a peaking out of the industrial cycle,” said Robert Prior-Wandesforde, senior Asia economist at HSBC.
“After all, there is still plenty more in the way of fiscal and monetary stimulus effects to come through to the economy, while we remain hopeful that exports, particularly to the rest of Asia, will recover shortly,” he said.
The new orders index fell to 56.2, also its lowest in four months, from 60 in July.
Wandesforde said while the survey showed higher commodity prices had pushed up input prices, lower output prices indicated manufacturers’ profit margins were being constricted.
July’s industrial output rose by 7%, commerce and industry minister Anand Sharma said last week.
Data on Monday showed the economy grew 6.1% in the June quarter from a year earlier, as government stimulus measures helped spur demand.
The central bank expects the economy to grow 6% or more in 2009/10 compared with last year’s 6.7%.