Factory PMI rises, input prices jump
India's manufacturing sector expanded at its fastest clip in three months in February as more new orders poured in, but input prices rose at a record pace, a survey showed on Tuesday.
The HSBC Markit Purchasing Managers' Index , based on a survey of around 500 companies, rose to 57.9 in February from 56.8 in January.
This was the 23rd consecutive month the key index of manufacturing in Asia's third largest economy has been above the 50 mark that divides growth from contraction.
"The momentum in India's manufacturing sector strengthened yet again in February, continuing the good start to the year," said Leif Eskesen, chief economist for India & ASEAN at HSBC.
"Output growth is holding up and the inflow of new orders is accelerating, holding promise of a strong momentum in output in the months ahead."
The new orders index rose for the third consecutive month to reach a seven-month high of 62.4 in February compared with 60.7 in the previous month.
However, growth in input prices accelerated at its fastest since data collection began in 2005, with the index rising for the eighth straight month.
"Manufacturers are facing ever steeper increases in input costs reflecting the tightness of labour markets and rising material costs, which will continue to add upward pressures on output prices," Eskesen added.
Even though the Reserve Bank of India (RBI) has raised its policy rates seven times since last March, it said last week that the balance of risks had tilted towards stronger inflation and it was ready to respond again if price pressures increased.
Oil prices rose to 2-½ year highs last week on concerns about supplies from the Middle East after uprisings in Libya slashed exports from North Africa, while food prices have also skyrocketed.
The RBI raised interest rates in late January by 25 basis points, as expected, to clamp down on resurgent inflation, warning higher food prices could become entrenched if steps to boost output are not taken.
The Indian economy grew at a slower-than-expected pace of 8.2 percent from a year earlier in the October-December quarter, compared with 8.9 percent in the previous quarter, government data on Monday showed.
Finance Minister Pranab Mukherjee presented his annual federal budget on Monday, saying the impression of policy drift in the scandal-tainted government was misplaced and that food inflation was still a major concern.
The government boosted spending on hundreds of millions of its poor in a budget gambling on brisk economic growth to cover the cost of appeasing voters angered by corruption scandals and stubbornly high inflation.
JITENDRA KUMAR SINGH
PGDM SEM-2
The HSBC Markit Purchasing Managers' Index , based on a survey of around 500 companies, rose to 57.9 in February from 56.8 in January.
This was the 23rd consecutive month the key index of manufacturing in Asia's third largest economy has been above the 50 mark that divides growth from contraction.
"The momentum in India's manufacturing sector strengthened yet again in February, continuing the good start to the year," said Leif Eskesen, chief economist for India & ASEAN at HSBC.
"Output growth is holding up and the inflow of new orders is accelerating, holding promise of a strong momentum in output in the months ahead."
The new orders index rose for the third consecutive month to reach a seven-month high of 62.4 in February compared with 60.7 in the previous month.
However, growth in input prices accelerated at its fastest since data collection began in 2005, with the index rising for the eighth straight month.
"Manufacturers are facing ever steeper increases in input costs reflecting the tightness of labour markets and rising material costs, which will continue to add upward pressures on output prices," Eskesen added.
Even though the Reserve Bank of India (RBI) has raised its policy rates seven times since last March, it said last week that the balance of risks had tilted towards stronger inflation and it was ready to respond again if price pressures increased.
Oil prices rose to 2-½ year highs last week on concerns about supplies from the Middle East after uprisings in Libya slashed exports from North Africa, while food prices have also skyrocketed.
The RBI raised interest rates in late January by 25 basis points, as expected, to clamp down on resurgent inflation, warning higher food prices could become entrenched if steps to boost output are not taken.
The Indian economy grew at a slower-than-expected pace of 8.2 percent from a year earlier in the October-December quarter, compared with 8.9 percent in the previous quarter, government data on Monday showed.
Finance Minister Pranab Mukherjee presented his annual federal budget on Monday, saying the impression of policy drift in the scandal-tainted government was misplaced and that food inflation was still a major concern.
The government boosted spending on hundreds of millions of its poor in a budget gambling on brisk economic growth to cover the cost of appeasing voters angered by corruption scandals and stubbornly high inflation.
JITENDRA KUMAR SINGH
PGDM SEM-2
This entry was posted on at 1:09 AM. You can follow any responses to this entry through the RSS 2.0. You can