Manufacturing looks up in Feb: HSBC survey
NEW DELHI: Production activity in Indian factories in February, recorded its strongest growth in 12 months, latest data from a monthly survey released on Monday showed, triggering hopes about a possible revival in the economy that is battling to claw out of a decade- low slowdown.
The manufacturing sector showed signs of strengthening in February bolstered by new orders and new export business that rose at a quicker clip.
The HSBC Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, grew to 52.5 in February from 51.4 in the previous month indicating improving business conditions.
PMI is a metric to measure industrial activity capturing output to sales. A reading below 50 indicates contraction.
Commenting on latest PMI data, Leif Eskesen, chief economist for India & ASEAN at HSBC said: “Manufacturing activity picked up further in February. New order flows have firmed, with the improvement in external demand and the reduction in macroeconomic uncertainty since last summer.”
This, in turn, he said has provided a lift to output growth. However, the recovery in activity is still likely to prove protracted given the lingering structural constraints. Moreover, underlying inflation pressures remain potent, which was evident from the jump in the input price component of the PMI survey.
“This will keep RBI hawkish and likely to compel it to raise rates a bit further this year,” he said.
Reserve Bank of India (RBI) governor Raghuram Rajan had raised the key policy rate by 0.25 percentage points to 8% in the third quarter review of monetary policy to cool inflation.
India’s growth rate slipped to 4.7% during October-December 2013-14 against 4.8% in the previous three months.