Mumbai: The rate of growth in Indian manufacturing rose for the first time in three months in December, with activity reaching its highest since May on sharp rises in new work and output, a survey showed.
The HSBC Markit Purchasing Managers’ Index (PMI), based on a survey of 500 companies, rose to 55.6 in December from 53.0 in November. The reading was the strongest since May’s 55.7, which was the strongest in 2009.
A reading above 50 means activity expanded during the month.
“Concerns that growth in India’s manufacturing sector was taking a decisive turn for the worse should be allayed by this impressive release,” said Robert Prior-Wandesforde, senior asian economist at HSBC.
“While the headline index didn’t quite manage to hit a new cycle high, it wasn’t far away at 55.6, buoyed by stronger gains in the output and orders components,” he said.
The economy grew an annual 7.9% in the September quarter, but growth was expected to slow in the December quarter when the impact of a weak monsoon would be seen on crops, giving the government more room to keep pro-growth policies in place.
“The rise in the new exports orders index suggests that external demand is also playing an increasingly important role in driving output gains,” Prior-Wandesforde said.
The new orders index rose to 60.10, the highest for the year, from November’s 54.60.
“Nevertheless, the release suggests that most manufacturing companies remain cautious about the durability of the recovery. They remain reluctant to hire workers, with the employment balance a touch below 50.0, as well as pass on much of the strong rises in input costs into higher output prices,” he said.
“Both factors will change over time, however, if we are right in suggesting that the economic recovery will continue at a robust pace.”