In­dia fac­tory out­put climbs to four-month high in May

The China Post - - WORLD BUSINESS -

In­dia’s fac­tory out­put rose to a four-month high in May on in­creased de­mand, a sur­vey showed Mon­day, in a fur­ther boost for the econ­omy af­ter data showed it was out­grow­ing China. Bank­ing gi­ant HSBC said its pur­chas­ing man­agers in­dex (PMI) in­creased to 52.6 points last month from 51.3 in April.

May’s num­ber was the best since the 52.9 recorded in Jan­uary but was still some way short of the two-year high of 54.5 in De­cem­ber.

Ac­cord­ing to the sur­vey, seen as a harbinger of industrial ex­pan­sion and eco­nomic health, a read­ing of more than 50 points sug­gests ex­pan­sion while any­thing be­low in­di­cates con­trac­tion.

“PMI data sig­naled a fur­ther ro­bust ex­pan­sion of the In­dian man­u­fac­tur­ing econ­omy in May,” said Pollyanna De Lima, an econ­o­mist at Markit fi­nan­cial ser­vices.

Gov­ern­ment data re­leased Fri­day showed In­dia’s econ­omy grew at 7.3 per­cent in the last fi­nan­cial year. It grew by 7.5 per­cent yearon-year for the first three months of 2015, ac­cord­ing to the fig­ures, out­pac­ing China. Mon­day’s sur­vey showed de­mand had picked up in key sec­tors of the econ­omy, in­clud­ing con­sumer and cap­i­tal goods.

But De Lima warned that the rise may not be sus­tain­able as In­dia has yet to see a growth in job cre­ation.

The econ­o­mist hinted that the Re­serve Bank of In­dia (RBI) could boost the econ­omy by low­er­ing in­ter­est rates for the third time this year when it meets on Tues­day.

Modi’s right-wing gov­ern­ment, which swept to power in gen­eral elec­tions in May 2014 on pledges to boost a flag­ging econ­omy, wants RBI gover­nor Raghu­ram Ra­jan to slice more points off the bench­mark repo rate, the level at which it lends to com­mer­cial banks.

The gover­nor has so far made con­trol­ling in­fla­tion a pri­or­ity, and it is well within the RBI’s tar­get of six per­cent, in­creas­ing the like­li­hood of a rate cut.

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