Manufacturing growth declines to three-month low
Moneylife Digital Team 02 February 2015
The Reserve Bank of India is scheduled to review its policy rates on Tuesday. An interest rate cut could be a stimulus to manufacturing activity in India
 
Manufacturing growth declined to a three-month low in January 2015 on slower pace of order flows from domestic and global markets. According to the monthly HSBC-Markit survey just released, India's headline Purchasing Managers' Index (PMI), a composite gauge of manufacturing business conditions, fell from December's two-year record of 54.5 to 52.9 in January 2015. A figure above 50 indicates the sector is expanding, while a figure below that level means contraction.
 
The slip in growth rate can partly be attributed to consolidation after two months of impressive upticks, felt HSBC's chief India economist Pranjul Bhandari.
 
“On the inflation front, growth in input and output prices moderated further due to cheaper commodity prices. Sluggish growth and falling inflation further reinforces our view that the RBI should deliver upfront rate cuts. We expect the repo rate to be lowered by 75 bps in the first half of 2015,” Bhandari said.
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