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The volume of incoming new work at manufacturing firms in India rose during February with around 29% of monitored companies reporting higher levels of new orders and just 14% noting a decline
The growth of India’s manufacturing sector increased in February supported by strong growth in domestic orders and a rise in international demand. The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—stood at 54.2 in February. It declined to a three-month low level of 53.2 in January and was at 54.7 in December.
“Manufacturing activity picked up on an increase in domestic orders,” HSBC Chief Economist for India & ASEAN Leif Eskesen said.
The volume of incoming new work at manufacturing firms in India rose during February with around 29% of monitored companies reporting higher levels of new orders and just 14% noting a decline.
“Anecdotal evidence suggested that new orders increased in line with stronger demand, maintained product quality and the launch of new products,” the report said, adding that a further rise in export orders was recorded amid evidence of stronger demand from international clients.
“Inflation pressures, however, remain firm, with input cost inflation holding steady and inflation of output prices picking up,” Eskesen said, adding that “The numbers underscore that the room for monetary policy easing is limited, even with progress on fiscal consolidation.”
The Wholesale Price Index-based inflation dropped to a three-year low of 6.62% in January. Retail inflation, however, continued to remain in double digits.
In its quarterly policy review on 29th January, the Reserve Bank of India (RBI) after a nine-month long hawkish monetary policy stance slashed its key interest rates by 0.25%.
Meanwhile, employment in the Indian manufacturing sector expanded slightly during February. Firms stated that payroll numbers were increased in tandem with higher production requirements.
The Economic Survey of 2012-13 tabled in Parliament on Wednesday has predicted a growth rate of 6.1%-6.7% for the next fiscal
Further developments in India's economic growth prospects, its external position, fiscal reforms including subsidies and GST, and political climate will determine the medium-term trajectory of the sovereign ratings on India, the ratings agency said