Indian factory activity expanded at its fastest pace in 17 months in July as firms responded to burgeoning new orders by increasing output even as input prices jumped sharply, a business survey showed on Friday.
The HSBC Manufacturing Purchasing Managers’ Index (PMI) , compiled by Markit, rose to 53.0 in July from 51.5 in June, its highest since February 2013. A reading above 50 separates growth from contraction.
- Soon You Could Get Plastic Currency Notes: Find Out More
- Ranveer Singh and Vaani Kapoor Starrer Befikre Gets A Thumbs Up
- Supreme Court Seeks Centre’s Response Over Various Issues Regarding Demonetisation
- Defence Minister Manohar Parrikar Writes To West Bengal CM Mamata Banerjee
- Bigg Boss 10 December 8 Review: Swami Om Feels Cheated, lashes Out At Gaurav For Jail Punishment
- South Korean President Park Geun-Hye Impeached Over Corruption Scandal
- Former Air Chief SP Tyagi Arrested In VVIP Chopper Scam
- After Congress Vice President Rahul Gandhi, Liquor Baron Vijay Mallya’s Twitter Account Hacked
- Find Out What PM Narendra Modi Told Cabinet Over Demonetisation Decision
- Home Minister Rajnath Singh Assures Safety Of All Tourists Stranded On Havelock Island
- Government To Waive Service Tax On Debit, Credit Card Transactions Of Up To Rs 2,000
- President Pranab Mukherjee Criticises Parliament Disruptions Over Demonetisation
- Pakistan International Airlines Flight Carrying Over 40 Passenger On Board Crashes
- Shah Rukh Khan On Raees Clash With Kaabil: It’s Impossible To Have A Solo Release In India
- US-President Elect Donald Trump Named TIME’s Person Of The Year 2016
While the PMI has signalled an expanding manufacturing sector for nine months, a surge in new orders in July helped drive the solid improvement in business conditions.
The new orders sub-index soared to 55.9, its highest since February last year. That was the biggest monthly jump in the measure in eight months.
“A flood of new orders from both domestic and external sources has led to a surge in activity,” said Frederic Neumann, co-head of Asian economic research at HSBC.
“Details within the survey show that all monitored categories witnessed a rise in output and order flows.”
However, the strong reading was tempered by a sharp increase in the cost of raw materials.
Input prices rose at their fastest pace since February, indicating inflation may remain elevated in coming months as companies seek to pass on the higher costs although that is not something they did to a large extent last month.
“The speed of the recovery has also lifted price pressures… This means that the Reserve Bank of India may not cheer as loudly as the rest of us,” Neumann added.
Consumer inflation eased to 7.3 percent in June, but fears of a spike in food prices if there is below average rainfall will probably prompt the central bank to hold its key interest rates steady at its next meeting on August 5.